Source: China Good Packaging Network
As many industry insiders expected, the paper market ushered in a "open door" in the years to come. Recently, Fujian Liansheng Paper and Wugang City Huaneng Technology issued a price increase letter, indicating that the paper price will be raised by 100-200/ton based on the original price.
Fujian Liansheng Paper Industry
Since February 11, 2019, the paper grades have been uniformly raised by 100/ton on the basis of the original price.
Wugang City Huaneng Technology
Since February 12, 2019, the price has been increased by 200/ton based on the original execution price.
Coupled with the announcement of Shanying Paper, which was raised on February 20th, the paper mill’s move undoubtedly proved the predictions of some people in the industry: with the need for replenishment after the holiday, the increase in the length of paper mills, etc. Factors, the packaging paper market has a staged upswing expectations.
Shanying Paper
Since February 20th, all paper grades of each base have been raised by 50-100/ton.
A similar point of view is Macquarie, the leading financial institution in the Asia Pacific region. A few days ago, Macquarie issued a profit warning for Nine Dragons Paper (which is expected to have a net profit of at least RMB 2.4 billion at the end of last year, down 45% year-on-year). It is in line with expectations and predicts that there will be room for improvement in paper prices in the future.
Macquarie estimates that Nine Dragons' sales in the first half of the fiscal year were 7.55 million tons, which means a profit of 316 yuan per ton. This is because the paper exporters' exports were weak, and the price of mainland cardboard papers dropped sharply from November to December, causing a large amount of stocks to move to the upstream, thus dragging the profit per ton of paper to a short-term decline.
However, after the New Year, the price of paper will increase. Mainly because of the potential solutions to the Sino-US trade war, the recovery of consumption in the Mainland, and the gradual replenishment of downstream enterprises, which will drive the profit per ton of paper to rebound to 150-200 RMB from the end of December.
Macquarie expects that the profit per ton of paper in Xiaolong is 350-380 RMB. The main papermaking base will raise prices by 50 to 100 RMB after the new year, which will become a short-term catalyst.
Macquarie said that with the accelerated integration of the industry, it is expected that the market share of Nine Dragons Paper will increase and the bargaining power will be strong. The profit per ton of paper can be maintained at 350 to 400 ports in the long run.
It can be seen that although the current market demand has declined relative to previous years, it still cannot prevent the pace of paper mills from rising prices. Coupled with the predictions of large financial institutions, the paper market in the future is undoubtedly injected with a shot in the arm. The phenomenon of opening the door is brewing.
However, whether this price increase can be implemented remains to be seen, and a large number of new capacity will be put into operation in the future. This situation may lower the upward momentum. Therefore, from a comprehensive perspective, paper prices may show an upward trend after the year, but the increase may be limited.
Editor in charge: Ge Hongyan
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