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The Price Of Raw Materil Of Paper Reduce Now.
Nov 06, 2018

So far this year, the price of waste paper has fallen by a third from above 3,000 yuan a tonne.The usual corrugated price has also turned down from its may peak.

From "gold nine silver ten" to "black nine ash ten"

Since may, the factory-gate price index of both paper and paper products have been falling month on month, with only the pulp manufacturing price index rising month on month.In September, however, factory prices for pulp and paper manufacturing, which had been rising for the first time, also fell, and the decline in paper and paper manufacturing was much steeper that month.

Falling prices have put paper out of business.The latest industrial statistics released by the national bureau of statistics showed that in September, the output of machine-made paper and paperboard (except the processing of purchased raw paper) of industrial enterprises above designated size reached 9.899,000 tons, down 4.7% year-on-year.Cumulative production in the january-june period reached 88.664 million tons, down 1.1 percent year-on-year.Even a reduction in output has not stopped prices from falling.

According to the market price changes of important production data in circulation issued by the bureau, the prices of pulp (bleached chemical pulp) and high strength corrugated have been decreasing continuously in the first half and the second half of the statistics.

The last round of surging paper prices started in the second half of 2016. With the tightening of environmental protection policies, domestic demand for various paper products increased. However, due to the compression of production capacity required by environmental protection requirements in the paper industry, the shortage situation became increasingly fierce and the paper prices soared.

In addition, in July 2017, the general office of the state council issued the implementation plan for promoting the reform of the solid waste import management system by prohibiting the entry of foreign garbage, in which the waste paper that had not been sorted was "prohibited to be imported" by the end of 2017.For a long time, China's paper enterprises rely on imported recycled paper production.Therefore, as soon as the news hit the ground, the paper price ushered in a comprehensive surge.Higher fuel and transport costs have helped fuel the last rally.

Relevant statistics show that in 2016 and the first half of 2017, the main business revenue of the paper industry increased by 7% and 14% year on year, and the total profit increased by 16% and 41% year on year, respectively.

Going into 2018, though, things are very different.Waste paper is not among the 32 types of solid waste listed as prohibited from import as of 31 December 2019, according to the newly published catalogue of imported waste management.This also means that China will still be allowed to import waste paper by 2021.Affected by this, the national waste prices all the way down, directly leading to the price of paper pressure.

Industrial chain enterprises are happy and anxious.

Paper price fluctuates, to the enterprise on industrial chain, it may be said "a few happy a few anxious".

During the rise of paper prices, paper enterprises are naturally happy, but for the downstream printing and packaging enterprises, it is a "chicken ribs", because once the raw materials rise too fast, these enterprises because of long-term contracts have been signed, can not change prices at will, faced with a significant reduction in profits.

Another downside of the sharp fluctuations in the price of paper for the industry is that companies cannot accurately grasp the price cycle, once prices fall and production capacity happens to be too much, paper companies are often covered.

According to statistics, there were 6,681 enterprises of paper and paper products above the scale in China in 2017, and the main business income of the whole industry was 1.52 trillion yuan.In 2017, the total output of China's pulp (including wood pulp, non-wood pulp and waste paper pulp) was 79.49 million tons and the apparent consumption was 10.51 million tons, of which wood pulp produced 10.5 million tons and consumed 31.52 million tons.

In addition, China's annual consumption of various types of paper is 110 million tons, with an average per capita of 77-78 kilograms, higher than the world average of 57 kilograms.

Industry insiders said that pulp, as an important raw material in the paper industry, has a high degree of marketization in the industry, diversified market players, frequent price fluctuations, and strong hedging demand from enterprises.At the same time, China is becoming the main driving force for the new demand of global commodity slurry, which has a high degree of external dependence and needs to improve the discourse power with strategic thinking.

Paper industry to meet the new phase of hedge investment

"Wood pulp is one of the few major traded commodities in the world that is not traded in mature futures markets.China's high share of global imports of iron ore, soybeans, rubber, wood pulp, only wood pulp is currently no futures market.China, Western Europe and the United States are the big three.Guotai junan futures analyst gao linlin said.

It is understood that pulp is the raw material of papermaking. According to the process, the pulping can be divided into chemical pulping, chemical mechanical pulping and mechanical pulping. The raw material of pulping usually includes wood, bamboo, non-wood (including straw, reed, fern residue) and waste paper.

"From the Angle of supply and demand data, global commodity market tends to balance between supply and demand, however, the market is dynamic, when need to pay attention to the analysis of the prediction: new capacity to delay or cancel, exchange rate changes, the depressed market results in the existing commodity pulp capacity closures, different kinds of abnormal price lead to different results of supply and demand, China's small plant shut down, the dosage of giant starts ascending, wood pulp increase capacity, different kinds of conversion, etc."Gao linlin points out.

The article links: for China's packaging and printing industry