The price increase of cultural paper has landed
The price increase of cultural paper has landed, and we look forward to improving profits during the peak season. At the beginning of this year, the price of cultural paper fell slightly due to the influence of the off-season. As the traditional peak season from March to May approached, paper prices faced an opportunity to rise. In late January, major cultural paper companies announced that they would raise paper prices by 100 yuan/ton and 200 yuan/ton respectively in February and March. By the end of February, the price hikes were expected to be implemented, and the peak season effect on the demand side was initially evident.
However, considering the relatively low concentration of the double adhesive paper industry and the possibility of outdated production capacity still being cleared, it is expected that the impact on peak season paper prices will be limited. In addition, from a cost perspective, the short-term price of broad-leaved pulp from overseas has been boosted, and the domestic spot pulp price has rebounded, which also helps to support the peak season paper price. Leading paper companies are expected to benefit from the peak season paper price performance in terms of profitability due to the advantage of pulp and paper integration.
In terms of white cardboard, the supply side still exerts certain pressure on paper prices. Although major paper companies have issued price increase letters since January, there has been no significant improvement in the price of white cardboard paper so far. The industry's production capacity will exceed 2 million tons/year in 2023, and it is expected that there will still be 2.4-3.2 million tons/year of production capacity in 2024. The demand side is affected by macroeconomic factors, and the strength of recovery still needs to be observed.
Box tile paper companies have gradually improved their profits in the past 23 years, and are focusing on peak season performance in the past 24 years. In 2023, the profitability of corrugated paper companies for cardboard boxes has improved from a low level. According to the paper companies that have released performance forecasts, the net profit attributable to the parent company of Shanying International in the first three quarters was -341 million yuan, 70 million yuan, and 155 million yuan, respectively. It is expected to be 211 million to 259 million yuan in Q4; Jiulong Paper Industry's net profit attributable to the parent company for 23H1 and H2 was -995 million and 292 million yuan, respectively. In 2023, import tariffs on some types of paper will be reduced to zero, and the increase in imports of corrugated cardboard will impact the market share of domestic paper companies and suppress paper prices; Paper companies maintain competitiveness and stable profits during the off-season by lowering domestic waste procurement prices, optimizing inventory, and implementing lean management. They improve profits during the peak season with the release of demand and the boost of paper prices. The relevant tariff policies will remain unchanged in 2024, and the strength of downstream demand recovery remains to be observed. The business strategies of paper companies may continue. As the impact of imported paper tends to stabilize, it is expected that the overall profitability of paper companies will be better than last year, with better performance in peak season profitability.
