Business Agency: Paper Industry Analysis and 2019 Forecast in 2018

Data: From January to October 2018, the output of mechanical paper and paperboard (except for the purchase of raw paper) was 97.353 million tons; the import volume of waste paper from January to October 2018 was 12.83 million tons; the import volume of pulp from January to November 2018 It is 230.29 million tons.

First, corrugated paper

It can be seen from the price chart of corrugated paper in 2018 that the highest price of the whole year was formed in the middle and late May, but the price gradually decreased from the second half of the year until the end of November, the price of corrugated paper reached the lowest point in the year.

The highest price of corrugated paper in 2018

After the end of the first quarter of the corrugated paper, the price of corrugated paper began to rise continuously in late April. By mid-May, the price formed the highest point in the year, with an average price of 4837.5 yuan/ton.

Demand in the first quarter of this year turned from the peak season to the off-season, which affected the change of the price of corrugated paper. In this interval, the corrugated paper was affected by the suspension and start-up of the Spring Festival paper mill, and the price showed a trend of rising and falling. Just after the end of the Spring Festival, the price of corrugated paper has ushered in. On the one hand, it is affected by the rising prices of raw materials for production. On the other hand, the investment in environmental protection costs also affects the price of raw paper. In the second quarter, it was still in the off-season of the industry, and the corrugated paper market was flat. Compared with the previous period, the market trading situation slowed down noticeably, and the purchasing enthusiasm declined somewhat, so the price showed a downward trend. After April 19, due to the increase in raw material prices, a number of corrugated paper manufacturers began to issue price increases, and the price of corrugated paper began to increase significantly.

At the beginning of May, due to the strict control of the environmental protection department, the paper factory shutdown was widespread. With the advent of the May Day holiday, many paper mills also made a decision to shut down the maintenance, so the stock of corrugated paper was low after the holiday. In the linkage of the increase in the price of waste paper, as the price of waste paper, which is the main raw material for the production of corrugated paper, continues to rise, the manufacturers are facing a loss-making operation, and the price of corrugated paper is forced to increase sharply. After reaching the highest point of the year, due to factors such as the high inventory of paper mills and insufficient orders, paper companies have led to a sharp cut in the price of raw paper in order to speed up the shipment of paper enterprises.

The lowest price of corrugated paper in 2018

In the second half of 2018, the price of corrugated paper continued to decline. Until the end of November, the price of corrugated paper reached the lowest point in the year, with an average price of 3,350 yuan/ton.

First of all, from the second half of the year, the price of corrugated paper was affected by factors such as shrinking downstream orders and entering the downtrend channel. In addition, the terminal retail sales were sluggish, which led to pressure on the industry. Since 2017, the growth rate of total retail sales of consumer goods has fluctuated year-on-year. In October 2018, the growth rate was 8.6%, which was the low point in recent years. The sluggish demand for terminals has hampered the demand for wrappers and other packaging papers. Secondly, due to the impact of the trade war, domestic export trade has shrunk this year, and orders have fallen sharply. Therefore, the operating rate of paper production lines is difficult to guarantee. As the phenomenon of under-employment often occurs, the demand for corrugated paper is seriously declining. In terms of the import of raw paper, the import of corrugated paper with high quality and low price has flooded into the country, which has caused great impact on domestic supply. It is even worse for paper mills with high inventory. In addition, many paper companies have fought for the price of their customers, which has driven the price of corrugated paper to continue to decline. Finally, due to the sharp rise and fall of paper prices in the past two years, the downstream purchasing mentality tends to be rational, and no longer blindly reserve a large amount of raw paper stock. This has also led to an increase in the pressure on paper stocks, and the lack of momentum in the increase in supply pressure has continued to be low.

To sum up: since 2018, due to the impact of trade wars and the continued strictening of environmental protection, the continuous supply of raw materials, the relative increase in production costs, and the lack of downstream demand, the supply pressure in the corrugated paper market remains. Most paper stocks are still at a high level. In addition, some paper companies still have new capacity plans, so the impact of the contradiction between supply and demand, the corrugated market situation does not rule out the possibility of a decline. In 2019, due to the transfer of foreign orders, Sino-US trade friction, the decline of domestic demand and the end of the peak season of the Spring Festival, the impact of packaging paper into the off-season demand, the demand for corrugated paper is also expected to decline. It is expected that the first quarter of 2019 will be corrugated. The price of the base paper will be between 3,000 and 3,500 yuan / ton.

Second, waste paper

It can be seen from the 2018 waste paper price chart that the highest price of the year was formed in the middle and late May, and the lowest point of the year was formed at the end of November, but at the end of September, the price of waste paper showed a cliff-like decline. After that, although the price has rebounded slightly, the price has been low due to insufficient power. Looking at the 2018 waste paper price chart, it can be described as "ups and downs."

In the first three quarters, the price of waste paper continued to climb to a high level, and then the price fluctuated more than

This year, the waste paper industry was in the rising stage due to the dual system control of import quotas and quality during the first five months of the year. The price of waste paper raw materials has been rising continuously. It reached its peak in May and once broke 3,000 yuan. The mark has formed a long-term positive for the price of waste paper. However, the price of waste paper has been at a high level during the period from May to September. The fluctuation cycle is relatively obvious. This is also affected by the Sino-US trade disputes, and there is a certain pressure on the country's avalanche.

At the end of September, the price of waste paper showed a cliff-like decline.

From September 25th to 30th, after the Mid-Autumn Festival, the price of waste yellow paper fell sharply. On the 28th, the national waste paper price fell also ushered in a small climax. On the same day, most of the country’s manufacturers fell two times a day, and the cumulative decline continued. High innovation. The overall waste paper market has been greatly reduced from north to south, and the country's waste price has dropped to a trend of 2000. Since the beginning of September, the paper market has been prosperous in the peak season. The Sino-US trade war has been escalating, and the export situation has also weakened. Due to the decline in demand, the downstream packaging industry has been cautious in purchasing, which has led to the situation that the paper mills are caught in production and the more difficult to sell. To this end, near the arrival of the National Day holiday, paper mills have chosen to stop production and limit production, to maintain the price of finished paper, reduce inventory, and suppress the national waste price.

In the fourth quarter, the price of waste paper rose first and then fell, and once fell to the lowest in the year.

After the waste paper fell, the price of waste paper showed a slight upward trend in early October, but the price continually fluctuated and fell to the lowest point of the year. The reason for the continuous decline in prices: First, the demand for finished paper in the peak season is seriously insufficient, resulting in pressure on the start-up load of paper mills, so the demand for waste paper is also greatly reduced. Second, due to the serious pessimism in the market, the strategy of using waste paper to help sell finished paper has not seen significant results. Coupled with the decline in domestic consumption levels and the reduction in demand for packaging paper under the trade dispute, the price of waste paper has shown a downward trend.

To sum up: in 2018, the price of waste paper showed a downward trend. In the first half of the year, the price of national waste yellow paper continued to rise at a high level, and the status of the ups and downs remained in the second and third quarters. In the fourth quarter, the price of national waste yellow paper fell to a minimum from the high level of the year. In 2019, Chongqing Xiaolong's 550,000-ton packaging paper project will be put into production after the Spring Festival, which will have a greater impact on the supply and demand of waste paper in the southwest market. In addition, in 2019, the first batch of approvals for external waste was as high as 5.03 million tons. This shows that after the Ministry of Ecology and Environment summarized the advantages and disadvantages of the external waste approval method in 2018, the adjustments were made to the approval method instead of releasing the quantity of imported waste paper. signal. It is expected that the price of national waste yellow paper will rise in the first quarter of 2019.

Third, wood pulp

From the 2018 wood pulp price chart, it can be seen that compared with the price at the end of 2017, the price of wood pulp started to decline at the beginning of the year. In the first half of the year, the price trend of wood pulp did not rise, and it has been in a state of shock and downward. In the second half of September, the price of wood pulp reached a high point throughout the year. At the end of 2018, the price of wood pulp fell to the lowest level in the year.

Wood pulp prices are in a downward trend from January to July

After the 2017 surge, the price of wood pulp began to fall in 2018, but it is still at a high level since 2012. The downturn in downstream demand led to a fall in prices, and the price of upstream pulp fell.

From the global and wood pulp shipment growth rate from January to July, the data is the lowest since 2015. And domestic port inventory is at a high level. The core reason why the price of pulp has not fallen is that the fundamentals of the foreign market are firm and there is a time lag in the reverse price of the price. This year, the domestic paper industry economy is declining. It is difficult for the company's tonnage level to achieve V-type reversal, which will lead to a decline in the operating rate of the industry. The downturn in production in the medium and long-term will lead to a weakening demand for wood pulp, and the uplift of upstream pulp companies will be forced to reduce shipments. The price and high price of pulp are difficult to maintain.

August-September, the price of softwood pulp and hardwood pulp increased

Since August, the spot market of hardwood pulp and softwood pulp has risen positively. China's 5% tariff on the US pulp is expected to push up the cost of imported pulp in China, which is one of the reasons for the increase in wood pulp prices. In addition, the depreciation of the RMB has deepened, and the cost of the business has been under pressure. The price of wood pulp has rebounded. In September, the spot market price of broad-leaved wood pulp and softwood pulp increased slightly, but the market gradually returned to a stable state. The downstream was in a state of just buying and buying, and the port inventory was sufficient, so the pulp price was slightly in a soft state. The RMB exchange rate has also begun to gradually stabilize. Because the price of wood pulp has risen a bit too much, there is a technical callback.

The wood pulp market fell sharply from the demand and futures listings in October-December

In October, the trading atmosphere of the wood pulp market showed a general trend as a whole. After the end of the eleventh holiday, the demand did not improve. The pulp market as a whole was in an oversupply state, and various pulp price indices showed a downward trend, and the overall price of wood pulp continued to decline slightly. The price and demand for wood pulp continued to be in a downturn in November, and demand has not improved in the near-end of the month. In addition, the demand for downstream paper products in pulp is weak, and the prices of major paper products such as cultural paper and packaging paper have fallen and shipments have been poor. The paper mills have lower operating rates, and some paper mills have taken the initiative to stop production and go to stocks, which is also the reason for the low demand for wood pulp.

On November 27th, pulp futures opened on the Shanghai Futures Exchange, and the first day trading closed with a down limit. In the next few days, the main contract of pulp futures fell below the 5000 mark, and the difference between the price of pulp futures and the spot price was quite different, which reflected the current market's pessimistic expectations for pulp. Therefore, under the effect of high stocks and pulp futures, the loosening of pulp prices has led to a decline in the price of wood pulp. As paper mills have issued downtime letters, the downward pressure on downstream paper products will weaken in the short term, but will reduce the demand for wood pulp to a certain extent.

To sum up: in 2018, the paper industry was still in a relatively high position in the first half of the year, but with the downward trend of paper prices, the impact on the demand for wood pulp played a driving role. The paper industry's market price cuts frequently, and the decline in demand is the reason that the price of wood pulp fell to a low level at the end of the year. With the impact of the listing of pulp futures in 2019, the market pricing mechanism will continue to strengthen and improve. In the later period, as market participants increase, pulp futures will have an enhanced role in guiding the price of the spot. At the same time, China's pulp pricing ability has been improved, the traditional pricing model has been improved, the formation of pulp market pricing mechanism has been promoted, and paper companies have been provided with risk evasive means such as hedging.

Throughout the 2018 paper industry, due to the impact of trade wars and the continued strictening of environmental protection, limited supply of raw materials, increased production costs of enterprises, and weak downstream demand, the profitability has declined, and the overall operational problems of the paper industry have increased. Increase. Looking forward to 2019, although there are still many uncertain factors in the external environment, the paper industry will still be a year of challenges and opportunities. In the case of a relatively weak downstream consumption in 2019, the industry's downturn may continue. It is expected that the short-term improvement of the corrugated paper will not be significant as the off-season comes; the waste paper price policy will continue to be significantly tightened, but the first batch in 2019 The amount of approval for external waste is as high as 5.03 million tons. It is expected that the price of national waste yellow paper will rise in the first quarter of 2019. The price of wood pulp is also affected by the overall decline in the paper industry. The demand for pulp has slowed down, and the price of pulp is expected to be 2019. The overall weakening of the year will be a high probability event.

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