Countdown to the price surge for corrugated board

In the fourth quarter of 2024, the price of corrugated paper reversed the downward trend in the first three quarters and rose well. As of the end of December, the average price of corrugated paper was 3,105 yuan/ton, 54 yuan/ton higher than the average price of 3,051 yuan/ton at the beginning of 2024, an increase of 1.78%. So what are the reasons?

First, the upward trend in the price of the main raw material waste yellow board paper brought market fluctuations. As of December 26, the average monthly price of China's waste yellow board market was 1,594 yuan/ton, up 5.07% from the average monthly price in November. The average gross profit margin of the corrugated paper industry in December was 10.45%, an increase of 1.99 percentage points from November. In December, the average market price of domestic AA-grade corrugated paper 120g was 2,875 yuan/ton, up 6.08% from the average monthly price in November. Although the increase in raw material prices is not as high as the increase in corrugated paper prices, paper companies have been able to recover profits under the influence of meager profits or even loss-making operations in the first three quarters, so they have a strong desire to raise prices.

Secondly, in December, affected by holidays such as the Spring Festival and New Year's Day, there are expectations on the demand side, and downstream packaging factories are actively replenishing their inventories, which also provides favorable support to paper prices to a certain extent. The increase in the operating rate has made the inventory of paper companies present a good trend. As of December 26, the inventory of sample companies in China's corrugated paper industry fell by 33.68% from the end of November; the inventory of sample companies in the box board industry fell by 25.16% from the end of November. The operating load rate of the corrugated paper industry increased by 1.58 percentage points from November, and the operating load rate of the box board industry increased by 3.07 percentage points from November.

Third, from the supply side, the market supply may be narrowed. As the Spring Festival approaches, some paper mills have already released the Spring Festival shutdown and maintenance plan as early as mid-December, so the market supply has been reduced, which also has certain favorable support for the market trend of corrugated board paper.

In addition, before the release of the new tariff policy (now released), the market had expectations for adjustments to the export tariff policy in 2025, and some terminal export commodity orders surged, which to a certain extent also stimulated the rise in corrugated board prices.

In general, there are multiple favorable supports for the rise in corrugated board prices in the fourth quarter of 2024, but with the arrival of the Spring Festival, the downstream paper mills' purchasing enthusiasm has declined and the shutdown plan has been added, and demand may decrease. The release of the new tariff policy will also have a new impact on the corrugated board market, which will have a negative impact on paper prices.