Cost Pressure Meets Released Demand as Multiple Paper Companies Raise Prices

The reporter learned from Sun Paper on November 8 that the company will raise the price of ordinary wood-free offset paper products by 200/tonne on the basis of current prices, while the prices of other products will be adjusted by varying margins. Previously, cultural and household paper companies such as Nine Dragons Paper, APP and C&S Paper all issued price increase letters.

Institutions point out that, affected by a combination of factors such as ocean freight rates and the supply-demand gap, along with the continued release of consumer demand, paper companies have been raising prices one after another.

In the packaging paper market, Nine Dragons Paper issued four price increase letters on October 25, raising the price of grey-backed white board by 100/tonne at its Dongguan, Taicang, Chongqing and Tianjin bases. A day later, Nine Dragons Paper's major production bases announced that, from November 1, the prices of its full range of kraft linerboard, corrugated paper and white-faced/coated kraft linerboard would increase by 100-150/tonne. At the same time, Shanying Paper announced that packaging paper prices would rise by 100-150/tonne from November 1. Major paper mills including Lee & Man Paper, Jingxing Paper and Liansheng Paper all followed with increases ranging from 50-150/tonne.

In the cultural paper market, Bohui Paper and other companies announced that, from November 1, all paper grades would rise by 300/tonne on the basis of October prices. The main purpose is to eliminate the adverse impact of high costs on the company's operations.

In household paper, C&S Paper announced that, due to rising costs, it will adjust prices from January 1, 2022.

Analysts at Tianfeng Securities point out that corrugated and linerboard prices rose by a relatively large margin, with small and medium-sized paper mills clearly following suit, while price increases for cultural paper were concentrated among leading players.

Increased cost pressure, along with improving demand and other factors, has become the driving force behind the companies' price increases.

Some paper companies rely on imported pulp. C&S Paper recently said on an investor interaction platform that the company does not produce its own pulp for the time being. All wood pulp used as a production raw material comes from countries and regions such as Chile, Brazil, Canada, Uruguay, Finland, Sweden, Russia and Indonesia. At present, ocean freight rates remain at relatively high levels.

Jingxing Paper says that, in response to the pandemic, Malaysia issued multiple movement control orders, which affected the construction progress of the company's 800,000-tonne waste paper pulp project in Malaysia. The project is currently under construction, but the pandemic has caused a labor shortage. As the pandemic in Malaysia gradually eases, the company and the construction contractor will recruit construction workers through multiple channels and strive to advance the project's construction progress.

The upstream waste paper market is strengthening. Data published by China Paper Network shows that since October 30, domestic waste paper prices have continued to climb, with the waste paper index rising from 2320.45 to 2336.42. On November 8, prices in East China and Central China continued to rise by 30/tonne.

Changjiang Securities believes that inventories at various stages are currently at mid-to-low levels, and with profitability falling to a low level, paper companies have a strong willingness to raise prices. On the demand side, Changjiang Securities points out that, stimulated by consumption events such as "Double 11," demand for packaging paper is gradually being released, while the steady progress of spring tenders will drive demand for cultural paper.

It is worth noting that in recent years many companies have been laying out raw material projects one after another.

Xianhe Co. disclosed that it plans to invest no less than 10 billion yuan to build a 2.5-million-tonne integrated forestry-pulp-paper circular economy project in Shishou. Sun Paper's semi-annual report shows that in the second half of 2021, as the paper and pulp projects at its Guangxi base come on stream one after another, Sun Paper's pulp and paper capacity will exceed 10 million tonnes. Projects under steady construction at the company's Guangxi base include a 550,000-tonne/year cultural paper project, a 120,000-tonne/year household paper project, and the supporting 800,000-tonne/year chemical wood pulp project and 200,000-tonne/year chemi-mechanical pulp project. The company expects that all of the above paper and pulp projects under implementation will come on stream one after another between the second half of 2021 and the first half of 2022.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378638.html