Reporter Chen Jiayun reports from Beijing.
In the context of the continuous decline in profits of the domestic corrugated paper industry, the production capacity is still growing rapidly against the trend.
According to data from Zhuochuang Information, as of the end of November 2023, China's corrugated paper production capacity has reached 35.58 million tons, the highest level in the past 10 years.
Li Li, an analyst of the corrugated paper market of Zhuochuang Information, said in an interview with a reporter from China Business News that the production capacity of China's corrugated paper industry in 2023 is still in a new round of expansion cycle, with new production capacity continuously launched and the industry's supply capacity continuously improving. At the same time, the regional structure and capacity are also undergoing new changes, and driving the development of the regional market. From the perspective of changes in the production capacity of enterprises and devices, the large-scale production capacity of a single set of equipment lines has become the development trend of the industry, and provides strong support for enterprises to reduce costs and increase efficiency.
Capacity expansion
Despite the changes and challenges in the market environment, leading companies in the corrugated paper industry such as Shanying International (600567SH), Nine Dragons Paper (02689HK) and Sun Paper (002078SZ) and so on, still steadily promoting its expansion strategy.
On November 6, Shanying International announced that the first phase of its paper base project in Jilin, including 300,000 tons of corrugated paper and 100,000 tons of straw pulp, is expected to be put into operation within the year. In addition, the 400,000-ton corrugated and containerboard production line of Sichuan Overseas Chinese Phoenix Paper has been successfully put into operation in August this year.
Guosheng ** said that since 2022, the downstream packaging demand has been affected by the macro environment, and the trend of containerboard corrugated paper has continued to be sluggish, but the leading enterprises in the industry have not slowed down the pace of expansion, but have chosen to put into production against the trend and steadily expand production capacity. According to the announcements of various companies, in 2023, Shanying International, Nine Dragons Paper, and Sun Paper are expected to add 1.07 million tons, 1.45 million tons, and 1 million tons of containerboard corrugated production capacity, respectively.
According to data from Zhuochuang Information, in the past five years, the compound growth rate of production capacity of the corrugated paper industry has been 270%。It is not difficult to see that the production capacity of the domestic corrugated paper industry is still in a high-speed expansion cycle, and the production capacity continues to increase.
Judging from the development of the industry in the past five years, although the industry production capacity has experienced negative growth due to various factors from 2020 to 2021, with the gradual opening of China's operating environment, the integrated layout of large-scale paper mills, forest, pulp and paper has been gradually put into operation, and the production capacity of the corrugated paper industry has shown a growth trend. Li Li told reporters.
Li Li believes that the growth of corrugated paper production capacity mainly stems from two aspects: on the one hand, the production capacity of large paper mills continues to expand, which has significant advantages in industrial layout, industry scale and brand;On the other hand, in order to enhance their competitiveness, small and medium-sized paper mills have increased their production capacity by increasing production capacity and upgrading the original production line.
Shanying International said that based on the long-term development strategy, the company has steadily promoted the construction of projects under construction, steadily expanded the scale of production capacity, and continuously optimized the layout of domestic regional production capacity. With the commissioning of the first phase of the Jilin paper base, the company's production capacity will be further improved.
Earnings are under pressure
With the continuous growth of production capacity, corrugated paper has shown a downward trend throughout the year, and the industry's profitability has been squeezed.
The reporter learned that in the third quarter of this year, the corrugated paper market continued its downward trend, and the trading atmosphere continued to be sluggish. According to the data monitoring of Zhuochuang Information, the national average price of the corrugated paper market in the third quarter was 3458 yuan tons, a month-on-month decrease of 716%, down 1102%。
Li Li said that in the third quarter, the corrugated paper market was difficult to change the weak trend, and the paper price was running downward. Among them, the high point appeared in early July, at 3,591 yuan, and the low point was 3,383 yuanton at the end of September, with a difference of 208 yuan, and the fluctuation reached 615%。However, in October, the corrugated paper market first rose and then stabilized, and the average market price of AA grade 120 grams of products was about 3410 yuan tons. From November to December, in the traditional consumption season, with the support of festivals such as "Double 11", "Double 12", and New Year's Day, the demand side is expected to improve, which is conducive to the upward trend of paper prices.
However, the continued pressure on the industry's profitability can also be reflected in the financial report data of listed companies in the industry.
Nine Dragons Paper's results for the year ended June 30, 2023 show that the company's revenue decreased by about 121% to 5673.9 billion yuan, gross profit decreased by about 781% to 15300 million yuan, the loss attributable to the company's equity holders is about 238.3 billion yuan, a year-on-year change from profit to loss. At the same time, Shanying International's revenue in the first three quarters of 2023 is about 2131.2 billion yuan, a year-on-year decrease of 1626%；The net profit loss attributable to shareholders of the listed company was about 11.6 billion yuan, a year-on-year decrease of 31204%。
A person from a listed paper company told reporters that the packaging paper industry was in a state of weak demand in the first half of the year, but it has improved in the third quarter. He revealed that Shanying International's domestic papermaking sales reached 55 in September330,000 tons, a year-on-year increase of 1022%。"With the arrival of traditional festivals in the fourth quarter, packaging paper sales are expected to further increase. ”
Increased concentration
With the changes in the market environment and industrial structure, the corrugated paper industry is undergoing a profound change. A number of institutions and companies pointed out that the backward production capacity of the corrugated paper industry is accelerating the clearance, and the industry concentration continues to increase, showing a new trend of industry development of capacity integration and survival of the fittest.
According to the monitoring data of Zhuochuang Information, the scale capacity of a single set of corrugated paper in China has shown a continuous upward trend. Compared with the general single set of 100,000 tons per year during the peak period of the previous round of capacity expansion, the production capacity of a single production line has increased to 150,000-300,000 tons per year in the newly put into operation in 2023. From the perspective of production capacity distribution, as of November 2023, among the 148 corrugated paper statistical sample enterprises (large-scale paper mills are counted according to the production capacity of each base), there are only 3 enterprises with a production capacity of more than 1 million tons per year, accounting for 2 of the total number of sample enterprises03%；There are 6 enterprises with a production capacity of 500,000-1 million tons per year, accounting for 4 of the total sample05%；The number of enterprises with a production capacity of less than 200,000 tons per year accounted for 4662%, becoming the largest group.
It can be seen that the capacity concentration of the corrugated paper industry is still low, and the regional competition pattern is highlighted. Li Li said that the capacity distribution of the corrugated paper industry is relatively scattered, and the concentration of the top four production capacity in the industry in 2023 is only 2087%。Shandong, Hubei, Henan and other regions still plan to increase production capacity, which will bring about changes in growth and structural layout, and the flow of goods may also be adjusted, which will affect the overall competition pattern.
From the perspective of environmental protection policy, Guosheng's analysis believes that since the supply-side structural reform in 2016, the implementation of environmental protection policies and "waste bans" has accelerated the clearance of small and medium-sized production capacity in the packaging paper industry and improved the industry access threshold.
According to the statistics of Zhuochuang Information, in 2021, China's corrugated paper removal capacity will be 1.6 million tons, and the elimination rate will reach 42%。Due to shrinking supply and limited start-ups, the industry's capacity utilization rate continued to decline, falling from around 70% in 2018 to around 60% in 2022. However, with the strength of forward-looking overseas layout to ensure the best raw materials, the operating rate of leading enterprises is much higher than the industry average, and the market share is concentrated and accelerated.
Shanying International said that due to the impact of rising energy costs and environmental protection expenditures, the backward production capacity of some small and medium-sized paper enterprises has been accelerated. With the clarity of the carbon peak goal of the paper industry, the entry threshold for new projects will be higher and higher in the future, and the environmental protection threshold will continue to increase. At present, more small-scale, high-energy-consumption, and environmentally unqualified backward production capacity in the market will continue to be cleared, and the market share and competitive advantage will be further tilted towards large-scale paper enterprises.
Li Li said that at present, most of the production capacity of the corrugated paper industry is concentrated below 200,000 tons per year, and smaller enterprises will occupy a certain share of the market in the short term by virtue of their lower ** and local order advantages. However, with the gradual slowdown in the growth rate of large-scale paper mills, the new production capacity is mainly concentrated in regional medium-sized paper mills, and it is expected that the annual production capacity of 500,000-1 million tons will continue to grow in the future, which will further intensify the competition in the industry.
As the industry has been below the breakeven line for one year, Guosheng expects that under the pressure of profitability, small and medium-sized production capacity is expected to accelerate the retreat, which will help offset some excess capacity and promote the balance of supply and demand in the industry.