Supply contraction is difficult to change downstream downturn pulp strength is difficult to continue

Combined with the global pulp price in 2021, the profit level of the pulp mill remains relatively high, so the willingness to actively reduce production is weak, but the shipment is significantly reduced, the core is the decline in demand. In terms of global production capacity changes, there will be a small increase in the production capacity of coniferous pulp before 2024, a small amount of production capacity will be put into Mercer in 2022, and the production capacity of drift needle pulp will increase in 2023, and the production capacity of broadleaf pulp is relatively large.

(2) Domestic wood pulp production capacity increased

From the statistics of Zhuo Chuang, according to the production capacity of sample enterprises, it is estimated that in the first 11 months of 2021, China's total output of broadleaf pulp is 7.2 million tons, an increase of 3%. From January to October, China imported 12.45 million tons of broadleaf wood chips, an increase of 14.7%, and the import of coniferous wood chips was 700.15 million tons, an increase of 216.9%. In 2020, China's chemical pulp production was 5.03 million tons, and the output in 2021 was down year-on-year.

In the next few years, China plans to add new wood pulp capacity:

Liansheng Paper Zhangzhou Fujian 1.2 million tons of wood pulp;

Huatai Paper Dongying 700,000 tons of chemical wood pulp project;

Xianhe Paper Guangxi Project 1.5 million tons of self-pulping (eucalyptus, bagasse);

Nine Dragons Paper has a wood pulp production capacity of 600,000 tons in Hubei Jingzhou and Liaoning Shenyang (planned by the end of 2022). In 2021, Nine Dragons plans to add 1.1 million tons of bleached chemical pulp production line in Jingzhou.

Overall, in the next two years, the global new production capacity of needle pulp is still small, in 2021, China's demand is weak, resulting in a rebound in global stock of needle pulp, supply and demand turn loose, so in 2022, the supply and demand of needle pulp still depends on China's demand, supply is stable, the large surplus may not be large, if domestic consumption continues to recover after the epidemic, finished paper demand improves. Driven by the recovery of the paper mill opening probability, it may cause the phased supply of needle pulp to be tight, and the overall global supply elasticity of needle pulp is low, and price fluctuations are amplified.

Third, the demand

According to the statistics of Hawkins Wright, PPPC and other institutions, the total global demand for papermaking wood pulp is 412 million tons per year, of which 179 million tons of primary wood pulp, accounting for 44%, 70 million tons of commercial wood pulp, 26 million tons of coniferous pulp demand, 38 million tons of hardwood pulp, coniferous pulp in the northern drift needle pulp accounted for more than 60%.

(1) Domestic consumption has weakened amid setbacks

In 2021, the recovery of domestic downstream consumption is reasonable, and from the two-year average growth rate, the consumption of most finished paper demand terminal industries has recovered faster. As of October, the average growth rate of retail sales of food, beverage and tobacco and alcohol is 7%, 15% and 9% respectively; the cumulative average growth rate of retail sales of cosmetics, daily necessities and office supplies is 14%, 10% and 13%; the average growth rate of retail sales of sports and entertainment supplies is close to 25%; the growth rate of retail sales of some remaining industries, such as clothing, shoes and hats and Chinese and western medicines is slightly lower. They were 1% and -1.3%, respectively, while the average growth rate of retail sales of books, newspapers and magazines directly related to cultural paper was 9%. The sporadic epidemic in 2021 in China still has a certain impact on consumption, especially the slow recovery of offline catering consumption, and the "double reduction" policy in the education industry has led to a greater impact on the demand for cultural paper, and the final impact is still some time to observe, and the impact on the demand for cultural paper in 2022 is expected to be greater. The Central Economic Work Conference did not have a clear stimulus policy statement on consumption, pointing out that "we must adhere to the priority of saving and implement a comprehensive saving strategy", "In the field of consumption, enhance the awareness of the whole people to save, and advocate a simple, moderate, green and low-carbon lifestyle", and after the impact of the local epidemic in 2021, the bottom of domestic consumption gradually appeared. The follow-up is to test the intensity of endogenous consumption, and since 2020, under the impact of the epidemic, the growth rate of residents' income is limited, and the demand for preventive savings is expected to increase, and the consumption performance in 2022 will be more stable. The industry close to the must consumer goods is expected to be slightly stronger, optional consumer goods are expected to grow at a general rate, the growth rate of wrapping paper demand is expected to increase slightly, and the demand for cultural paper is expected to decline year-on-year.