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Recently, the price of chemical raw materials has skyrocketed, triggering a series of chain reactions in the industrial chain. Among them, due to the increase in the cost of raw material supply and the price of auxiliary materials, the price of white cardboard has exceeded 10,000 yuan / ton, and some paper companies have made a lot of money.
Previously, at the end of June 2020, the acquisition of Bohui Paper (600966.SH) by Sinar Mas Paper (China) Investment Co., Ltd. (hereinafter referred to as “APP (China)”) passed the national anti-monopoly investigation. The price of paper is 5,100 yuan/ton. By the beginning of March this year, the price of white cardboard has risen to 10,000 yuan/ton, and the price of domestic white cardboard has officially entered the era of 10,000 yuan. Against this backdrop, Bohui Paper’s profit in 2020 has quadrupled.
In an interview with a reporter from China Business News, an executive of a listed paper company said that the rapid rise in the price of white cardboard has indeed attracted widespread attention from the market. During the two sessions this year, some representatives also paid attention to the issue of rising paper prices, and put forward related recommendations. The increase in white cardboard was mainly due to the strong market demand. After its price exceeded 10,000 yuan, the production capacity of Chenming Paper’s white cardboard was still at full production, and production and sales were balanced. In addition, the price of raw material pulp is also increasing, and the paper price is more conductive.
The price breaks the million-dollar mark
In fact, the rise in paper prices has already appeared in August 2020. At that time, the market demand bottomed out and rebounded. Affected by changes in the supply and demand relationship, the prices of many paper types in the market increased.
In terms of white cardboard, in early September 2020, Chenming Paper, Wanguo Sun, and Bohui Paper began to lead the rise so far. The prices of mainstream brands of white cardboard in most markets have successively increased from 5,500/ton to more than 10,000 yuan/ton.
The reporter noticed that at the end of February 2021, the paper mills began to receive new orders in March, and the price of signed orders increased by 500 yuan/ton compared with the previous period. However, compared with February, the price increase of orders received in March expanded from the original 500 yuan/ton to around 1,800 yuan/ton. Make the mainstream brand white cardboard offer 10,000 yuan / ton.
Earlier, Bohui Paper stated that due to the impact of operating costs and the sharp increase in the price of various raw materials, the price of “white card/copper card/food card” series products is scheduled to increase by 500 yuan/ton from January 26, 2021. From February 26, 2021, it will be increased by 500 yuan / ton again. On March 1, the white cardboard market suddenly increased its price again. Bohui Paper increased its price by 1,000 yuan/ton, thus entering the era of 10,000 yuan.
Qin Chong, a researcher from Zhongyan Puhua, analyzed to reporters that the reason for the improvement of the white cardboard industry is that the “plastic restriction order” has been upgraded. White cardboard has become a substitute for plastics, and the market demand has increased sharply, which directly drives the growth of industry profits. At present, the annual use of plastic bags in my country exceeds 4 million tons. The promulgation and implementation of the “plastic restriction order” will greatly reduce the use of plastic bags. Therefore, in the next 3 to 5 years, white cardboard will still enjoy “bonus” .
“The main reason for the rapid rise in the price of white cardboard is that the supply of pulp is in short supply, and its price rise has led to the rise of paper prices.” The above-mentioned paper company executive told reporters.
Tan Chong also told reporters that the rise in the price of white cardboard has a lot to do with the supply of raw materials. At present, the shortage of raw materials for white cardboard in my country has directly led to an increase in costs, which has led to an increase in the price of white cardboard. Since October last year, the prices of soft-leaf pulp and hard-leaf pulp have both shown an upward trend. International wood pulp manufacturers have continued to raise prices substantially, and domestic spot market prices of needle- and hard-leaf pulp have continued to rise. 7266 yuan / ton, 5950 yuan / ton, other starch, chemical additives and other papermaking accessories and energy prices are also rising.
In addition, industry concentration is also an important factor triggering the continuous increase in paper prices. CSI Pengyuan credit data shows that in 2019, the total production capacity of white cardboard in my country is about 10.92 million tons. Among the top four paper companies, APP (China) has a production capacity of about 3.12 million tons, Bohui Paper about 2.15 million tons, Chenming The paper industry is about 2 million tons, and the IWC is about 1.4 million tons, accounting for 79.40% of the national white cardboard production capacity.
On September 29, 2020, Bohui Paper announced that APP (China)’s tender offer to acquire Bohui Paper’s shares was completed, and APP (China) held a total of 48.84% of Bohui Paper, becoming the actual control of Bohui Paper. On October 14th, Bohui Paper announced the re-election of the board of directors and the board of supervisors, and APP (China) sent management to settle in Bohui Paper. After this acquisition, APP (China) has become the leader of domestic white cardboard, with a production capacity ratio of 48.26%.
According to the Orient Securities Research Report, under the favorable supply and demand pattern, the price of white cardboard will continue to rise, and its high price is expected to continue into the second half of 2021. Since then, the trend of supply and demand is directly related to the release rhythm of new production capacity of white cardboard.
Price “surge” controversy
The skyrocketing price of paper has made some paper companies make a lot of money, and the average net profit growth rate of the paper industry has reached 19.02%.
Among them, Bohui Paper’s net profit in 2020 has increased fivefold. According to the performance report released by Bohui Paper on March 9, its operating income in 2020 was 13.946 billion yuan, a year-on-year increase of 43.18%; the net profit attributable to shareholders of listed companies was 835 million yuan, a year-on-year increase of 524.13%.
Bohui Paper said that the main factor affecting its operating performance is the change in national industrial policies such as the State’s “Opinions on Further Strengthening the Control of Plastic Pollution” and “Announcement on Matters Related to the Comprehensive Ban on Importing Solid Waste”. The increasingly prominent contradiction between supply and demand has prompted a recovery in the industry’s prosperity, and the company’s product sales and prices have steadily increased in 2020.
At present, the soaring prices of chemical raw materials such as paper industry have attracted attention from the outside world. During the two sessions this year, Hu Dezhao, member of the National Committee of the Chinese People’s Political Consultative Conference and chairman of Baiyun Electric (603861.SH), brought a proposal on preventing the skyrocketing of raw materials and maintaining “six stability” and “six guarantees”. More than 30 members jointly proposed that they hope to control the skyrocketing prices to maintain “six stability” and “six guarantees”.
The above proposal mentioned that after entering the Spring Festival holiday, the price of raw materials continued to jump wildly by 20% to 30%. The price of some chemical raw materials has risen by more than 10,000 yuan/ton year-on-year, and the price of industrial base paper has risen unprecedentedly. After the Spring Festival, special paper generally rose by 1,000 yuan/ton, and some paper types even jumped by 3,000 yuan/ton at one time.
The content of the proposal shows that it is normal for traditional manufacturing materials to account for more than 70% to 80% of the cost. “The owners of small and medium-sized enterprises complain that the prices of production materials are rising, and downstream customers are unwilling to raise prices, and life is particularly difficult. Some materials are a monopoly seller’s market, and the price rises sharply at the first level, which deviates from the normal price and leads to the cost price. It is also higher than the price of the product, some companies choose to charge back the order to compensate, and some companies are in trouble because the price of the order cannot cover the cost.”
Tan Chong told reporters that the continuous price increase of white cardboard is also a great cost pressure for downstream enterprises (packaging plants, printing plants), and consumers may finally pay the bill: “When consumers buy products, You have to spend a little more money on packaging.”
“The rise in paper prices does put pressure on downstream enterprises. However, an important reason for the rise in paper prices is that in the process of selling white cardboard, dealers play an important role. However, what dealers sell to downstream packaging plants is the paper they hoarded last month. Once the price rises, the profit will be very large, so the dealers are very willing to follow the increase.” The above-mentioned paper company executive told reporters.
The above proposal suggests that relevant departments should enforce supervision and inspection, and conduct price verification based on upstream and downstream products, combine self-inspection and supervision, strictly prevent hoarding, drive up the prices of raw materials and basic industrial products, and closely monitor the price index of industrial raw materials and bulk commodities to prevent raw materials. Soaring, maintaining “six stability” and “six guarantees”, and promoting the high-quality development of China’s economy.
Post time: Jul-14-2022