Paper companies are implementing multiple rounds of price hikes, with the possibility of increased profits in the fourth quarter

Since October this year, several paper companies have carried out one or more rounds of price increases. Recently, several bases under the company have announced price increase plans, and paper companies in various regions have followed suit, triggering a new wave of price increases in the entire paper industry.

In the first half of this year, the continuous expansion of production capacity has put significant pressure on the industry, resulting in varying degrees of year-on-year decline in the performance of several listed paper companies in the third quarter. The main reasons for the large-scale price increase in the paper industry are, on the one hand, cost requirements, and on the other hand, market demand is gradually recovering. "Chenming Paper Industry stated that currently, the paper industry has bottomed out and rebounded, and demand is slowly recovering.

Recently, multiple securities firms have reported that there may be limited room for further decline in pulp prices, coupled with downstream demand gradually entering the traditional peak season. Paper companies' profits are expected to recover in the fourth quarter.

Paper prices continue to rise

On November 6th, Shanying International once again issued a price increase letter for raw paper: starting from November 8th, the company's redwood, T-paper, tile paper and other bases in Zhejiang, Anhui, Fujian and other areas will all increase their prices by 30 yuan/ton. Not long ago, Shanying International had just completed a price increase.

At the same time, multiple bases under Nine Dragons Paper and Liwen Paper have recently announced plans to increase prices. Paper companies in various regions have also followed suit, such as Hunan Shenglong Paper Products Packaging Co., Ltd. and Hunan Jialong Environmental Protection Packaging Co., Ltd., all of which have released information on price adjustments.

In fact, since October, several leading paper companies have issued price increase letters.

Bohui Paper Industry recently issued a notice stating that due to the sustained high prices of raw and auxiliary materials, the cost of raw paper remains high. The company has decided to increase the price of non coated paper products produced by the company by 300 yuan/ton (including tax) from October 2024 onwards, starting from November 1st. Due to the annual maintenance needs of the paper machine, the cultural paper machines at Bohui Factory will be shut down for 3 days for maintenance in November.

Chenming Paper announced that due to the sustained high raw material prices in the third quarter, the company's operating costs have remained high. In order to ensure the provision of continuous and stable high-quality products and services to customers, the company has decided to increase the price of copperplate paper series products by 200 yuan/ton from November 1st. Due to the annual maintenance needs of the paper machine, Shouguang No.3 machine will be shut down for 4 days and No.8 machine will be shut down for 7 days in November for maintenance.

Huatai Corporation also recently issued a notice stating that due to market factors such as raw materials, the company's production costs have continued to rise. To ensure the company's continuous and stable provision of high-quality products, the company has decided to increase the prices of all cultural paper series products by 300 yuan/ton starting from November 1st.

Nine Dragons Paper, a Hong Kong listed company, has also undergone multiple rounds of price increases. The company's six major production bases had previously announced price increases, ranging from 30 yuan/ton to 50 yuan/ton, with a specific implementation date of October 18th. Shortly thereafter, the company stated that due to market factors, the price and value of white cardboard products have deviated significantly since the beginning of this year, and the company's white cardboard products have continued to suffer losses. In order to better provide customers with high-quality and stable products and services, and to prevent vicious competition caused by "inward rolling", the company has decided to raise the price of all white cardboard series products by 200 yuan/ton from November 1st, and to shut down some paper machines.

The industry may have bottomed out and rebounded

Currently, although the paper industry still faces many pressures, looking ahead to the fourth quarter, the industry generally believes that the industry has shown signs of bottoming out and rebounding.

In the first half of this year, with the continuous release of macroeconomic policy effects, the economic recovery has driven the recovery of the paper industry. In this context, several listed paper companies have achieved impressive performance growth in the first half of the year. However, in the third quarter, the profits of listed paper companies generally declined, and some even fell into losses.

Industry insiders believe that under optimistic expectations in the first half of the year, many paper companies have raised product prices in the third quarter. However, due to the slow recovery of market demand and continuous expansion of production capacity, the effect of this price adjustment was not ideal, and paper prices once again entered a downward trend in the second half of the year.

Entering October, the paper industry has once again experienced a new round of price hikes.

Regarding the reasons behind this round of price increases, Sun Paper believes that there are multiple factors: firstly, on the demand side, downstream demand will be boosted by the end of the year; Secondly, enterprises also have a need for insurance coverage; The third is the cost pressure caused by the sustained high prices of production raw materials.

With the concentrated production of new pulp production capacity by multiple enterprises, overseas broad-leaved pulp outer disc quotations have been significantly reduced to historically low levels. The decline in outer disc pulp prices will help top paper companies gradually release cost pressure. Dongfang Securities stated that considering the current pulp spot prices are in a stage of bottoming out, coupled with downstream demand gradually entering the traditional peak season, it is expected that the prices of cultural paper and specialty paper may gradually stabilize.

In terms of waste paper types, the price of domestic waste has slightly rebounded recently, and China's imports of corrugated paper have significantly decreased. With the downstream entering the traditional consumption peak season, the box board corrugated paper industry is expected to continue to recover.

In the long run, the trend of the paper industry's prosperity will continue to improve.

According to data disclosed by the National Bureau of Statistics, from January to August 2024, the national production of machine-made paper and cardboard reached 103.179 million tons, a year-on-year increase of 11.7%. According to the "14th Five Year Plan" and the medium - to long-term high-quality development plan for the paper industry, by 2025, the total output of paper and cardboard in China is expected to reach 140 million tons (with an annual per capita consumption of 100 kilograms), the output of primary pulp is 30 million tons, and the output of paper products is 90 million tons; By 2035, the total output of paper and cardboard will reach 170 million tons (with an annual per capita consumption of over 120 kilograms), the proportion of primary pulp will be over 30%, and the output of paper products will be 120 million tons.