Состояние отрасли гофрированного картона: ожидания во втором полугодии остаются относительно высокими

I. Current Status of China's Corrugated Paper Production

Corrugated paper is mainly used for packaging home appliances, logistics and express delivery, electronic products, daily chemicals, food and beverages, and so on. Containerboard and corrugated paper can replace wood and plastic with paper, and can also be recycled and reused. It is a green packaging material with good development prospects. In 2020, downstream market demand for corrugated paper performed unevenly under the impact of the pandemic: the output of home appliance products rose steadily with a slight increase; the output of beverages and frozen processed products declined markedly; while the express delivery business performed particularly well. Although demand for corrugated paper dropped sharply at the start of 2020, driven by strong demand in the second half, full-year demand edged up year on year, with consumption reaching 27.76 million tons, a record high, while output rebounded markedly to 23.9 million tons. In addition, the ban on foreign waste paper may cause a domestic raw material shortage, pushing both volume and price in the domestic corrugated paper market upward.

In 2018, under the pressure of policy adjustments on imported waste paper, domestic papermaking enterprises generally raised their quality standards for domestic waste paper procurement and enforced "zero tolerance" for impurities. Forced by this collective action of paper mills, the quality of domestic recycled paper improved across the board, with the purity of domestic recycled paper rising by more than 80%; at the same time, the price advantage of domestic waste paper recycling over imported waste paper remained unremarkable. Although the volume of domestic waste paper recycling continues to grow, in the short term it still cannot fill the gap left by imported waste paper. Therefore, waste paper pulp will become the main raw material for containerboard and corrugated paper in the future, and the current cost of waste paper pulp is far higher than that of imported waste paper. For containerboard and corrugated paper enterprises, costs will rise further, and the price of containerboard and corrugated paper will also rise further in the future.

II. Market Competition Landscape

Because the paper packaging industry is regional in nature, small local enterprises expand their business space by relying on relatively low prices and a strong ability to secure local orders, and a large number of tertiary plants produce boxes by purchasing board externally and using small equipment. As small equipment has low capital and technical thresholds, a large number of small enterprises have long existed in the industry and occupy most of the market share. Among them, the top three companies in the corrugated paper industry are Nine Dragons Paper, Rongcheng Paper and Golden Phoenix Paper, while the second tier mainly consists of containerboard and corrugated paper enterprises with relatively strong capacity in certain regions but no nationwide layout, with total capacity of 300,000–1.5 million tons;

the third tier consists of those with small capacity in certain regions, and the vast majority of small capacity falls into this category. As environmental protection policies tighten and the global economic landscape changes, imported paper will become one of the stable sources of choice for packaging enterprises; imports and domestic production will reach a new equilibrium, while domestic small and medium-sized containerboard and corrugated paper enterprises will be consolidated or shut down. In the future, as supply-side reform continues to deepen, the number of corrugated paper enterprises will shrink further and the regional concentration of the industry will rise further. Purely in cost terms, corrugated paper enterprises with a scale below 200,000 tons are more likely to be eliminated by the market in later competition.

III. The Impact of Import and Export on Corrugated Paper

After the promulgation in 2017 of the "Implementation Plan for Prohibiting the Entry of Foreign Garbage and Advancing Reform of the Solid Waste Import Management System," the share of domestic waste paper in papermaking raw materials rose year by year. In 2019, domestic waste paper consumption was 5.75 times that of imported waste paper consumption, accounting for 83% of total waste paper consumption. In 2019, China's total waste paper imports were about 10.75 million tons, down 36.9% year on year, and under the requirements of the Implementation Plan, waste paper imports would essentially cease after 2020. The tightening control over waste paper has led to a continuous decline in imports of this important raw material, while imported waste paper is an important fiber source for China's recycled paper such as containerboard and corrugated paper, grey-backed white board and newsprint.

Owing to the tightening of domestic waste paper import policies and the rapid growth of downstream demand for corrugated paper, China's imports of corrugated base paper have grown rapidly since 2017. In 2020, driven by explosive demand growth in fields such as express delivery and home appliances, China's corrugated paper imports reached 3.89 million tons. At present, China's production cost for containerboard and corrugated paper ranks high globally, so with a cost advantage, foreign containerboard and corrugated paper keep entering the Chinese market. China's high cost for containerboard and corrugated paper is mainly reflected in high fiber costs, while other costs such as labor, energy and chemicals are relatively low on a global basis.

In terms of the origin of imported products, imported kraft containerboard mainly comes from the United States, Russia and Australia, while recycled products (recycled containerboard and corrugated paper) mainly come from Asia, chiefly Southeast Asia. Considering the demand for plastic substitution, China's supply-demand gap for corrugated paper will widen further; the cost advantage of imported paper will still exist in the short term, so corrugated paper imports are expected to remain high. Since January 1, 2020, the Tariff Commission of the State Council has applied interim import tax rates lower than the MFN rate to more than 850 commodities, including corrugated paper, paperboard and some printed materials. It is not hard to imagine that this will further stimulate corrugated paper imports.

IV. Corrugated Paper Market Prospects

At present, the main factor sustaining the supply-demand fundamentals of the corrugated paper sector is still the huge demand for packaging paper from the logistics industry, represented by the express delivery industry. However, by the end of 2022, postal and express outlets in provinces and municipalities such as Beijing, Shanghai, Jiangsu, Zhejiang, Fujian and Guangdong will first be banned from using non-degradable plastic packaging bags and disposable plastic woven bags, and will reduce the use of non-degradable plastic tape. By the end of 2025, postal and express outlets nationwide will be banned from using non-degradable plastic packaging bags, plastic tape and disposable plastic woven bags. Considering that the papermaking industry is a typical cyclical industry, supply and demand determine paper prices and profits.

Its downstream is mainly the consumer goods industry, whose demand cyclicality is weak, but because capacity supply lags by 1–1.5 years, the mismatch between capacity release and demand causes cyclical fluctuations in paper prices and paper enterprises' profits. At the same time, the inventory cycle also affects paper prices and paper enterprises' short- and medium-term profits, with the center of the inventory cycle at about half a year. The lagging capacity supply further increases the risk of overcapacity in the industry, so the corrugated paper market structure will face a new round of reshuffling in the future.

V. Corrugated Paper Expected to Fluctuate Strongly in the Second Half

The overall expectation for the corrugated paper market in the second half of 2021 is strong, and the trading center may fluctuate upward. The main reasons are:

First, the supply of raw material waste paper is expected to tighten and paper prices will run strongly. After the policy of zero imported waste paper took effect on January 1, 2021, the phenomenon of tight supply in the first half was not obvious, but the expected supply shortage may emerge in the second half. Therefore, raw material waste paper is expected to see paper prices rise steadily in the second half. In addition, the coal-to-gas policy continues to advance, and the South China market has a clear implementation timetable, which is expected to increase regional production costs; therefore, from the raw material side this is favorable for a stronger trend in corrugated paper in the second half.

Second, judging from imports in the first half, the cumulative import volume of corrugated paper from January to May 2021 was about 1.3061 million tons, up 2.18% year on year. In the second half, imported paper will still be affected by factors such as rising ocean freight and tight shipping schedules; the impact of imported paper on domestic paper prices will weaken, and the competitive pressure on domestic paper prices will ease somewhat.

Finally, the second half is the traditional consumption peak season, with demand release points fairly concentrated, and the market is relatively optimistic about demand release driven by e-commerce festivals such as the Mid-Autumn Festival, the Spring Festival, Double 11 and Double 12; attention should be paid in the second half to whether demand release can meet expectations.

In summary, it is expected that the overall corrugated paper market will be stronger in the second half; the average price of China's AA-grade corrugated paper is expected to fluctuate within RMB 3,800–4,080/ton, with the second-half average expected at RMB 3,922/ton, up 4.98% from the first half and up 16.73% year on year.

——This article is reproduced from China Packaging Network (pack.cn), original link: http://news.pack.cn/show-377946.html