Global paper market trends

Since 2023, driven by the moderate economic recovery, the PPI growth rate of the paper industry has bottomed out, corporate earnings improve month by month and achieve positive growth at the end of the year, the paper industry is expected to continue to repair potential energy in 2024, the overall profit situation or will improve year on year, but it is difficult to have a sharp rebound, a smooth recovery will be the main tone of the industry operation.

● Since 2023, the prices of raw materials such as pulp and waste paper and energy prices such as coal have fluctuated downward; In the short term, the release of new production capacity is expected to be strong, and the prices of main raw materials and energy may have room to explore, but China's forest resources are less, and the pattern of high dependence on wood pulp imports is difficult to change, and the disturbance of wood pulp prices caused by changes in overseas supply chains still exists.

● Paper industry output growth year by year, superimposed "zero tariff policy" led to a substantial increase in the scale of finished paper imports, further intensify the domestic paper market competition, the overall supply pattern is loose, product price changes are mainly driven by the demand side, is expected to 2024 paper products overall price volatility or will narrow, but there is downward pressure.

● In 2023, due to factors such as sluggish downstream demand, fluctuations in raw material prices and inventory consumption, the overall profitability, cash earning ability and debt repayment indicators of paper enterprises have weakened; In 2024, the operating and debt repayment indicators are expected to be repaired, but the short-term debt of some leading enterprises is still very large, and its liquidity risk is worthy of attention.

Raw material costs such as pulp and waste paper account for about 60% of the total cost of paper manufacturers. The main raw materials of cultural paper and C1S ivory board are wood pulp, and the raw materials of packaging paper are waste paper and waste pulp. In 2022, China's total pulp consumption was 112.96 million tons, an increase of 2.59%, of which wood pulp accounted for 38% of the total pulp consumption, waste pulp 6,430 accounted for 57%, and non-wood pulp accounted for 5%.

Overall, since 2023, the decline in raw material prices and energy prices has alleviated the operating pressure of paper enterprises to a certain extent, but the cost transmission takes some time, the first three quarters of financial statements have not fully reflected the benefit of cost decline, it is expected that in the short term, the price of main raw materials and energy prices may have room to explore, but due to the high dependence of paper raw materials on overseas resources, Changes in overseas supply chains will still have a disruptive effect on domestic raw material prices.