Recently, leading paper companies such as APP, Chenming Paper, and Sun Paper have launched a new round of price increases. The price increase of various enterprises is mainly aimed at all cardboard foot gram products and all cardboard ultra-high pine products, of which all foot gram products are raised by 200 yuan on the basis of the current selling price, and all ultra-high pine products are raised by 300 yuan tons on the basis of the current selling price. According to the price increase letter, this round of price increase will be officially launched from April 1.
Previously, the main head paper companies had carried out a round of ladder price increases for their main products. For example, Chenming Paper and Sun Paper announced that they would raise the price of cultural paper products by 100 yuan from February 1, and raise the price of some cultural paper products by 200 yuan on the basis of the above from March 1. At the same time, the cardboard products** have also been adjusted accordingly. As soon as the news came out, a number of small and medium-sized enterprises followed suit.
As for the reasons for the price increase, the above-mentioned paper companies all mentioned the factor of high costs, pointing out that the price increase is to maintain the normal operation of the enterprise and ensure the quality of products and services.
Dongxing ** analysis pointed out that at the beginning of this year, the price of cultural paper fell due to the impact of the off-season, and as the traditional peak season from March to May approached, paper prices ushered in an opportunity to rise. In late January, the main cultural paper enterprises announced that in February and March, they raised the price of paper yuan, and at the end of February, the price increase was implemented, and the peak season effect on the demand side initially appeared. On the supply side, although Nine Dragons Paper and Huatai Co., Ltd. had an annual production capacity of 550,000 and 520,000 tons respectively at the beginning of the year, considering the relatively low concentration of the double-offset paper industry and the backward production capacity or still being cleared, it is expected that the impact on paper prices in the peak season will be limited. In addition, from the cost side, the short-term external hardwood pulp ** has been boosted, and the domestic spot pulp price has rebounded, which also helps to support the peak season paper price. With the advantages of pulp and paper integration, the profits of leading paper companies are expected to benefit from the performance of paper prices in the peak season. In terms of white cardboard, it is expected that 2.4 million to 3.2 million tons of annual production capacity will still be put into operation in 2024. The prosperity of the demand side is affected by the macroeconomy, and the strength of the recovery remains to be seen.
On the cost side, the production cost of paper enterprises is expected to fall. In the second half of 2023, the outer disk of wood pulp will pick up significantly, and the tonnage price of ARAUCO hardwood pulp will be $45 $50 and $70 $50 in Q3 and Q4 respectively, and the cost of pulp for major paper enterprises in 24Q1 (affected by transportation and inventory factors, lagging behind the change in pulp price) may still rise slightly. Since the beginning of 2024, the price of softwood pulp has been relatively stable, with softwood pulp falling slightly by about US$35 tons in January, and Suzano raising the price of hardwood pulp by US$30 per ton at the end of February. In the short term, pulp prices may maintain the first trend, and in the second half of the year, with Suzano putting into operation an annual production capacity of 2.55 million tons of hardwood pulp, it is expected that pulp prices (especially hardwood pulp prices) may weaken.
Industry insiders pointed out that the current prosperity of the paper industry is moderate and upward, and it is expected that the overall fluctuation range of paper products in 2024 will be narrowed year-on-year, and the operation and debt repayment indicators of the head paper enterprises are expected to be repaired.