Paper manufacturers to increase prices

On May 19th, Nine Dragons Paper, which ranks No. 1 in the packaging paper industry in China, launched the fourth round of price increases in May. This round of price increases was only two days after the first price increase. In a week, the price of Nine Dragons Paper's base paper rises on average every three days.

This is not over yet, the latest news on May 24th, Nine Dragons Paper started the fifth round of price increases in May! From May 24 onwards, Nine Dragons Cattle Cards and Corrugated Cards will increase by RMB 250/ton, Dilong Cattle Cards, White Flour Cattle Cards, and Coated Cattle Cards will increase by RMB 200/ton, and Recycled Cattle Cards will increase by RMB 150/ton.

At the same time, the Nine Dragons Base drove more than 40 paper companies in Hebei, Henan, Shandong and other places to increase prices. Corrugated paper, boxboard paper, yarn tube paper and other paper grades will be raised by 100 yuan/ton. Some paper mills also require original uncompleted orders to be within this price adjustment range.

Since May, major domestic cultural paper companies and traders have issued a number of price increase letters. Among them, the price of cultural paper has generally increased by 200 yuan/ton, and the price of white cardboard has increased by 1,000 yuan/ton.

On May 24th, #Paper manufacture halt production # rushed to the second place on Weibo's hot search list.

Zhang Shenjin, secretary-general of the All-China Federation of Industry and Commerce Paper Chamber of Commerce, said that the main reason is that the prices of pulp, logistics, and energy in the upstream of papermaking have increased globally, which directly increased the production costs of enterprises. The second increase is on the basis of the previous low, especially white cardboard, which now has a relatively large increase.

From November 2020, the price of white cardboard first exceeded 5,000 yuan/ton, and one month later, the price per ton rose to more than 7,000 yuan. The manager of a paper product packaging company said: “By this year’s Ching Ming Festival, it has risen to more than 9,000 yuan. After that, it went up by another 500 yuan. In just a few months, the price has more than doubled, and it is already more expensive than steel."

Although in this round of price hikes, the profits of many paper-making companies have grown rapidly, but since March, many paper-making companies have suddenly announced shutdowns for maintenance:

On March 31st, Shandong Sun Group announced that it will optimize and adjust industrial paper and art paper machines in April;

Shandong Huatai Paper issued a notice on April 26, planning to suspend production and maintenance of copper paper and paper machines in early May;

On April 27, Chenming Paper decided to shut down the cultural paper machine for 10 days in mid-to-early May.

This is because the price of pulp raw materials has risen, causing the price of pulp and paper to go upside down, so some paper mills can only choose to shut down.

Pulp is the main raw material of the paper industry, and its main sources can be classified into three categories: waste paper pulp, wood pulp, and non-wood pulp. Among them, waste paper pulp and wood pulp are the main sources. Wood pulp is mainly used for household paper and cultural paper, waste paper pulp is mostly used for packaging paper, and non-wood pulp is mostly used for household paper.

Since 2003, China's pulp imports have been ranked first in the world, and the demand is increasing.

Among them, wood pulp imports will reach 30.64 million tons in 2020, and imported wood pulp accounts for 72.8% of total wood pulp consumption. The price of wood pulp has entered an upward channel since the second half of last year, and this year's price trend is even more so. Data show that from July last year to March this year, wood pulp prices rose by more than US$400/ton on average.

Not only is the import volume of wood pulp large, but the import volume of my country's recycled paper pulp is also very high. Data shows that in 2020, the import volume of recycled paper pulp will total 1.78 million tons, a substantial increase of 93.48% month-on-month. The average import price has also increased significantly. The average import price in February 2021 was US$364.37/ton, an increase of US$80/ton from the end of 2020.

At the same time, with the formal implementation of my country's "Announcement on Matters Concerning the Comprehensive Ban on the Import of Solid Wastes", paper companies' waste paper import quotas have also been cleared. In order to fill the gap in raw materials, the price of domestic waste paper recycling has increased. The data shows that in April 2021, the average price of domestic yellow paperboard to the factory was 2,140 yuan/ton (excluding tax), a year-on-year increase of about 25%.

In fact, as early as April, China's four major household paper companies raised their product prices one after another, and some household paper products increased by 10%-20%. In fact, in addition to household paper, as industrial paper, the prices of white cardboard and cultural paper have also risen. Among them, white cardboard has undergone four price adjustments since November last year, and the price per ton exceeded 10,000 yuan after the Ching Ming Festival this year. Many packaging companies described the price adjustment letter from paper mills as a "urging talisman."

For foreign trade companies that export finished products, this means that almost all paper-based packaging materials will have to increase in price, which further squeezes order profits.

Since the beginning of this year, foreign trade companies have suffered from rising raw material costs. Since commodity prices bottomed out in March last year, a magnificent bull market has started. In particular, the prices of major commodities such as copper, iron ore, and rebar have hit record highs, arousing market concern.

On the morning of May 23, five departments including the National Development and Reform Commission, the Ministry of Industry and Information Technology, the State-owned Assets Supervision and Administration Commission, the State Administration for Market Regulation, and the China Securities Regulatory Commission held a meeting to jointly discuss the advantages of iron ore, steel, copper, aluminum and other industries. Key enterprises with strong market influence, the Iron and Steel Industry Association and the Non-ferrous Metals Association participated.

The meeting made it clear that in the next step, relevant regulatory authorities will closely follow the trend of commodity prices, strengthen the joint supervision of commodity futures and the spot market, and have "zero tolerance" for illegal activities; continue to increase law enforcement inspections to investigate abnormal transactions and malicious speculation. Resolutely investigate and punish violations of the law, such as reaching agreements to implement monopoly, spreading false information, driving up prices, hoarding and other illegal activities.

China goverment has taken action and hopes that raw material prices can return to normal and stable as soon as possible.