Pulp Market Review in 2022 and Outlook in 2023

In 2022, the weakness of the domestic paper market mainly stems from the imbalance of supply and demand, that is, the excessive production capacity of finished paper has increased significantly, making it difficult to match the demand, and the price of paper in the first half of the year is significantly lower than the same period in 2021, and after May, it fell again, while raw pulp is due to the sharp contraction of overseas supply, so the supply and demand in the industrial chain is more healthy. Make the profit upstream concentrated to paper pulp, paper mill profits dropped significantly, according to the first three quarters of mainstream listed paper enterprises disclosed data, net profit fell more than 40-50%, some manufacturers net profit fell by 80% to 90%, coniferous pulp dollar price at the beginning of the year at $760 / ton, At the end of the year, although there was a drop, it was still above $900 / ton, and the price of finished paper was only a small part higher than at the beginning of the year.

From the output data, the domestic machine-made paper and cardboard production announced by the Bureau of Statistics increased by 1.2% year-on-year from January to October, lower than the growth rate of 5.2% last year, but still recorded positive growth, some sample paper enterprises of Zhuochuang information statistics, the main wood pulp paper production increased by 8.7% year-on-year from January to November, white cardboard production increased by 20% year-on-year, and as of November 2022, White cardstock prices fell 9% from the beginning of the year, white cardstock in the end of 2021 to 2022 output capacity is large, while the concentration of production capacity is high, are dominated by large factories, after the price fell sharply in June, from the statistics of Chuang, white cardstock enterprises operating rate fell 10% from the high, but the monthly output of white cardstock still maintained the highest in the history of the same period, the year-on-year increase is larger. The operating rate of coated paper, double-adhesive paper and household paper also fell in the second and third quarters, but after the price of some paper rose in the fourth quarter, the operating rate rebounded at a low level, but the operating rate is still low, and household paper has been below 60%.

From some public information, there are a large number of paper production capacity in China from January to November 2022. Among them, white cardstock and paper production capacity is more, white cardstock new or converted production capacity of 1 million tons, Zhuo Chuang information statistics in 2021 China's white cardstock production of about 9 million tons, 2022 new production capacity increase of more than 10%, and 2021 according to statistics newly released high-grade white cardstock production capacity of 2.82 million tons, The new production capacity of white cardboard in two years is close to 4 million tons, which can account for about 40% of the production in 2020, which also makes the white cardboard operating rate fall, but the output continues to increase. In the first 11 months of 2022, the new capacity of household paper is also more, and the new capacity can be counted to be close to 990,000, the paper association statistics 2021 household paper production of 11 million tons, the proportion of new capacity is close to 10%, although the price of household paper this year is better than other paper classes, but the operating rate has not been increased, and the capacity is more abundant. In addition, there are 620,000 tons of cultural paper and special paper production capacity put into production, and in December 2021, according to statistics, there are 320,000 tons of household paper and 50,000 tons of special paper production capacity put into production in the past two years, more domestic new paper production capacity, accounting for more than 10% of paper production, but the same period demand growth is affected by public health events, the economy and other difficult to match. Resulting in a sharp fall in the profits of paper mills, operating rates are low.

Six, weak consumption of finished paper demand is general

Demand for finished paper performance is general, mainly from the weakness of the domestic economy, as the demand distribution is more dispersed commodities, industries are involved in the demand for paper, this year under the impact of public health events, real estate, domestic demand has been poor, but also bring weak demand for finished paper. Taking the retail sales data of major consumer goods as an example, the growth rate from January to October was 0.6%, much lower than the growth rate of 12.5% in 2021, and lower than the average growth rate of 3.5% in 2020-2021. By industry, the growth rate of retail sales of optional consumer goods from January to October was generally lower than the average growth rate in 2021 and the past two years. Beverages, tobacco and alcohol, clothing, shoes and hats, cosmetics, daily necessities, cultural office supplies growth rate fell, the growth rate of retail sales of essential goods rose, such as grain and oil, and drugs that benefit from public health events, and these are the main demand terminals of white cardboard, wrapping paper and some cultural paper, after its growth rate fell or turned negative, the relevant paper consumption growth rate also fell or declined year-on-year. China's GDP growth rate in the first three quarters was 3%, 0.6% in the same period in 2020, and 2.2% in the whole year, the spread of public health events in many places in the fourth quarter, and the economic growth rate in 2022 is only better than that in 2020, in addition to the weak annual price of wood pulp paper, some non-wood pulp paper, such as corrugated paper and box board paper prices also continued to fall throughout the year.