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News Center
- Why does the paper industry dare to raise prices in the second half of the year?
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- After a wave of price hikes in mid-June, several paper manufacturers, including Chenming Paper and APP, have recently issued a price increase letter, announcing that starting from July 1, the company's paper prices will be raised on a June basis. Up 200 yuan / ton.
In the face of the industry dilemma of "always building the bottom, it is difficult to climb up" in the first half of the year, the paper industry once again sounded the horn of "calling up and stopping down" in the second half of the year.
"If there is one word to describe the situation of the paper industry this year, it is 'difficult to make profits'." Liu Hui, an industry analyst at Zhuochuang Information, said in an interview with a reporter from "Securities Daily" that the cost of raw materials such as pulp is high, and paper companies have no choice but to go downstream. However, it suffered from weak terminal demand, "the peak season is not prosperous, and the off-season is even weaker", and the cost pressure is difficult to transmit, resulting in the narrowing of industry profits.
In the second half of the year, the traditional peak season of the industry will drop, but under the current background, will the paper industry be as predicted by some institutions: will demand recover, costs drop, and profitability improve? Can the new round of price hikes for paper companies be able to keep pace with the recovery of the industry's prosperity?
Multiple rounds of price increases are difficult to effectively land
"I can't remember how many times I received a letter of price increase from paper mills in the first half of the year." Mr. Shi, head of a large paper packaging company in Zibo, Shandong, told the "Securities Daily" reporter: "Since this year, raw materials and other costs have been high, and paper There are paper companies as a last resort, but the terminal demand is weak and the process of recovery is required, and our packaging companies are also extremely difficult.
Liu Hui explained to reporters the "dilemma" of the paper industry by taking the implementation of the price increase action of paper companies in May and June as an example. "Recently, except for household paper, the implementation of the price increase letter for other finished paper is weak. For example, household paper has an increase of 1,200 yuan / ton in May, and finally implemented an increase of 1,000 yuan / ton in that month; corrugated paper, container board The paper announced an increase of 100-150 yuan/ton, and it would be good to finally realize the increase of 50 yuan/ton; the increase of cultural paper is even more difficult. / ton." Liu Hui said.
The reason is the contradiction and game between supply and demand.
From the perspective of cost, for pulp-based paper types such as cultural paper and white cardboard, the continuous high fluctuation of pulp prices has brought huge cost pressure to paper companies. A light industry analyst from a domestic securities firm told the "Securities Daily" reporter that in fact, imported wood pulp has continued to rise since December 2021. In the first quarter of this year, due to the continuous supply news in the international market, multi-party games have pushed up pulp prices. And drive the current linkage of pulp prices, pulp prices continued to fluctuate at a high level in the second quarter. According to the monitoring data of Zhuochuang Information, the price of hardwood pulp in June this year increased by nearly 30% compared with the beginning of January.
"For waste paper, including corrugated, box board, whiteboard, etc., the increase in raw materials is not as sharp as that of pulp, which is basically flat or slightly increased, but labor costs and energy prices are also rising." Liu Hui said .
In order to alleviate or pass on the upstream cost pressure, paper companies can only transmit to the downstream in the form of price increase letters. However, due to factors such as the epidemic, the terminal demand has shown a weak state, so downstream processing and packaging companies are also calling for price reductions.
"The paper industry is basically 'seeing the rise but not falling'. Only when the price goes up, it will send a letter, and when the price is cut, it usually goes down quietly." Liu Hui said, so even if the paper companies "call for a rise" every month, they are still invincible in the end. The weak demand side has caused the paper prices of most paper grades to decline in the first half of the year.
According to the monitoring data of Zhuochuang Information, from the beginning of January to June 24 in 2022, the average price of white cardboard in pulp is 6,248 yuan/ton, a year-on-year decrease of 28%, and the average price of coated paper is 5,538 yuan/ton, a year-on-year decrease of 16.79 yuan. %, the average price of double-adhesive paper was 6,016 yuan/ton, down 8.12% year-on-year; the average price of corrugated paper in the waste paper system in the first half of this year was about 3,796 yuan/ton, down 2.76% year-on-year, and the average price of containerboard was 4,865 yuan/ ton, a slight increase of 0.9% year-on-year, maintaining a level comparable to that of the same period last year. Only the paper price of wood pulp household paper achieved a certain percentage increase in the first half of the year, with an average price of 7,013 yuan/ton, an increase of 11.18% year-on-year.
Is the profit recovery of paper companies expected in the second half of the year?
Although the results of the second quarter have not yet been released, it can be seen from the performance of the paper industry in the first quarter that in the first quarter of this year, among the 22 listed companies in the paper industry (Shenwan industry) in Shanghai and Shenzhen A shares, although only Meiliyun suffered a loss , the remaining 21 companies achieved profitability, but compared with the same period in 2021, the net profit attributable to the parent company of 18 companies declined to varying degrees.
Everbright Securities reviewed the situation of the paper industry since 2022 and believes that the bulk paper industry has reached the bottom of both fundamentals and valuations; the specialty paper segment has survived the "darkest moment" in the first quarter of this year.
"For the bulk papermaking sector, the core contradiction that leads to the current weak domestic papermaking industry is domestic demand." Everbright Securities analysis pointed out that with the effect of the steady growth policy and the improvement of domestic demand, the prosperity of the domestic bulk papermaking industry will be effectively improved; As for the special paper sector, after surviving the "darkest moment" in the first quarter, it is expected that the next performance is expected to show a quarter-on-quarter upward trend with the implementation of price increases and the subsequent drop in pulp prices.
In the interview, Liu Hui also believed, "This round of rallying is not only a continuation of the industry's trend of 'calling for ups and downs' in the first half of the year, but also a practice in the industry. Because the second half of the year will start the traditional peak season of the paper industry. In the second half of the year, the peak season of textbook printing and publishing will gradually come, and the price of cultural paper is expected to gradually rise. This round of rising can also be seen as a clarion call for the industry to warm up. "Just based on the current situation, the expected release space is still relatively limited. For the future development, We maintain a cautiously positive view for the time being. "
The aforementioned brokerage analysts told the "Securities Daily" reporter, "At the beginning of this year, the disturbance factors on the international wood pulp supply side are gradually easing, and the pulp price is expected to fall back to the fundamentals under the weak supply and demand pattern. The marginal improvement in the terminal demand for finished paper is expected to remain, and the demand The weak terminal situation may be hoped for the recovery of consumption and production after the epidemic." The analyst said that with the easing of the epidemic situation in many places in June, the stimulation of shopping festivals, and the subsequent improvement of the consumption environment, paper companies will be able to destock smoothly, it is not ruled out Peak season exploration may rise.
When talking about the changes in the paper industry structure this year and in the future, Liu Hui believes that due to multiple factors this year, large paper mills are in the process of steady expansion, the elimination process of small paper mills has not been fully accelerated, and the industry concentration is temporarily improved. Not obvious.
However, the high fluctuation of international pulp prices has made the advantages of leading enterprises with forestry, pulp and paper integration capabilities more prominent. Bai Wenxi, chief economist of IPG China, told the "Securities Daily" reporter that at present, companies with "forest-pulp-paper integration" such as Sun Paper and Chenming Paper have a greater competitive advantage, and they have a greater competitive advantage in terms of imported pulp. Compared with the development pattern of the paper industry with a high degree of dependence, it is indeed "the one who wins the pulp wins the world".
