Why did paper mills stop production after rising paper prices?
In the midday of May 24, the topic of # paper mills cease production # rushed to the hot search on Weibo. In the previous week, # paper price rises directly forced pork # also appeared on the hot search.
Affected by this news, the A-share papermaking sector rose sharply today.
Why do paper companies stop production while raising prices?
The Red Star Capital Bureau interviewed and learned that the upstream pulp mills have increased their prices due to the impact of raw material prices, but the prices have been higher than midstream paper companies, forming an upside-down; on the other hand, the impact of price increases has not been transmitted to most end consumers, making the midstream Enterprises bear the pressure of price increases.
The upstream price is upside down and the lack of orders in the downstream has caused paper companies to suspend production one after another.
Hot search on "Paper Mill Discontinued"
A midstream packaging paper mill has stopped production for 12 days
In the noon of May 24, #纸机厂頂擊Production# topic rushed to the second place in the hot search on Weibo.
Many netizens said that paper waste is still a major problem, and it is recommended that paperless offices be improved to increase the recycling rate of waste paper.
Unlike netizens who pay more attention to environmental protection, the paper mills are more concerned about the issue of stopping production and having no work to do.
"We made packaging cardboard for the copy paper factory. Some time ago, the white paper rose too much. The customer couldn't sell it, and the order for us was small, so we didn't have work to do." A Shandong Packaging Paper The factory revealed to the Red Star Capital Bureau, “It had been suspended for 12 days half a month ago. Now it’s a day or two and three or four days off. Workers are still arguing if they can’t make money.”
According to CCTV News, paper towels in many places have started to increase in price recently. 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.
The Red Star Capital Bureau learned that the price of packaging paper has risen by about 200 yuan/ton.
At the same time, many domestic cultural paper companies and traders issued price increase letters.
Nine Dragons Paper (02689.HK), the leader in the packaging paper industry, launched its third price increase this month on May 17. In a week, the price of Nine Dragons Paper's base paper increased on average every three days.
Along with the news of the price increase of Nine Dragons base paper, the cardboard market has also ushered in a new round of price increases, many of which are already in the second round of increases.
In addition, the price of household paper is also rising.
In April this year, the four major tissue paper companies Jin Hongye, Hengan International (01044.HK), Vinda International (03331.HK), and Zhongshun Jierou (002511.SZ) successively issued price increase letters. When will they adjust their terminals in the future? The price of the product is temporarily uncertain.
The Red Star Capital Bureau learned from previous interviews that since December, household paper companies in Shaanxi, Hebei, Shanxi, Zhejiang and other places have successively issued price increase letters, generally increasing by 200 yuan/ton.
Affected by this news, the market opened yesterday morning, and the cardboard sector rose sharply, leading the two markets.
As of the close, Meiliyun (000815.SZ), Yibin Paper (600793.SH), Yueyang Forest Paper (600963.SH), Qingshan Paper (600103.SH) and other daily limit, Zhongshun Jierou (002511.SZ) , Chenming Paper (000488.SZ) and many other stocks followed the rise, while Nine Dragons Paper fell -3.17%.
In terms of financial reports, in the first quarter of this year, Chenming Paper's net profit was 1.179 billion yuan, a year-on-year increase of 481.42%; Sun Paper (002078.SZ) had a net profit of 1.108 billion yuan, a year-on-year increase of 106.71%, both of which performed well.
Upstream pulp prices rise
"Raw material prices are rising"
Generally speaking, price increases are good news for the supply side and coincide with the rapid growth of industry profits, and companies usually increase production.
However, many paper mills have announced the suspension of production in this round of price increases.
On March 31, Shandong Sun Group announced that it would optimize and adjust industrial paper and art paper machines in April; on April 26, Shandong Huatai Paper issued a notice that it plans to stop production and maintenance of art paper machines in early May; On April 27, Chenming Paper announced that it decided to shut down the cultural paper machine station for 10 days in mid-to-early May.
Why is there such a situation?
Zhang Shenjin, secretary-general of the All-China Federation of Industry and Commerce Paper Chamber of Commerce, said in an interview that “the reason for the downtime is that the price of pulp raw materials has risen, causing the price of pulp and paper to go upside down, so that some paper mills have no choice but to shut down.
A pulp company in Inner Mongolia told the Red Star Capital Bureau that the increase in pulp prices was mainly due to the relationship between supply and demand and the increase in raw material prices.
"Containerboard paper and corrugated paper are generally made from domestic recycled waste paper into pulp; but toilet paper, household paper, is made of imported wood pulp. Now the prices of waste paper and imported wood pulp are rising. ."
The Red Star Capital Bureau learned that with the official implementation of my country's "Announcement on the Comprehensive Ban on Imports of Solid Waste", the quota for waste paper imports for paper companies has also been cleared at the same time, and domestic waste paper recycling prices have risen at the same time.
Relevant data shows that the average price of domestic yellow paperboard to the factory in April 2021 was 2,140 yuan/ton (excluding tax), a year-on-year increase of about 25%.
At present, my country's waste paper recycling rate has reached 90%, surpassing developed countries such as Japan, Europe and the United States, but there is still a huge waste paper gap.
In addition, for household paper, the sharp increase in the price of imported wood pulp and the huge import demand have also exacerbated the increase in pulp prices.
According to CCTV News, since July 2020, wood pulp prices have risen by more than US$400/ton (approximately RMB 2574/ton) on average.
In addition, China, as the world's largest pulp importer, imported 70,000 tons of pulp at Manzhouli Port in the first quarter of this year, an increase of 37% year-on-year; the value was 260 million yuan, an increase of 42.1% year-on-year.
my country imported 30.64 million tons of wood pulp in 2020, accounting for 72.8% of total wood pulp consumption last year.
Price increase pressure is brewing to spread to the consumer side
There is a 30% drop in profits at print shops
The price increase of pulp mills has directly led to mid- and downstream paper companies brewing price increases.
The Red Star Capital Bureau learned that before a piece of white paper appears to consumers, the pulp mill first needs to supply the raw materials to the paper mill and the cardboard mill; then the paper mill produces the white paper, and the cardboard mill supplies the packaging paper mill to produce the packaging paper; Finally, the white paper and wrapping paper are combined and sold to the terminal.
"Our processing plants cannot fully transmit the price increase pressure to the terminal. Consumers don't buy it, and we dare not raise customer prices high. We are willing to do it even if we don't make money, but even so, the orders are still insufficient. "A packaging paper factory said to the Red Star Capital Bureau, "Customers are also under great pressure. Copy paper has risen from more than 5,000 to more than 7,000. One ton has increased by 2,000, and customers can't sell it."
When the midstream paper mill was under pressure from both the pulp mill and the end customer, the end customer’s life was not easy.
According to media reports, the owner of a print shop stated that the original price of white cardboard was 6,500 yuan/ton, and now it is 13,000 to 14,000 yuan/ton. The price of paper continues to rise, but the printing price remains unchanged, which makes their profits increasingly lower. , Now the profit point has been reduced by almost 30%.
However, in terms of household paper, ordinary consumers have not been greatly affected. At present, the price of household paper in large supermarkets is relatively stable compared with ordinary wholesalers.
Hema non-food procurement management expert Zhang Guangping said in an interview that because chain supermarkets already have a lot of household paper inventory, and they have signed long-term supply agreements with manufacturers, there should be no household paper prices in the short term. The rising situation.
Chengdu Commercial Daily-Red Star News reporter Yu Yao
Intern reporter Xie Yutong