Pulp prices are expected to further cash in paper companies profit turning point is expected to appear

At the end of the year and the beginning of the year, pulp prices that continued to run at historic highs began to fall, and pulp prices were expected to be further fulfilled.

Recently, Chilean pulp producer Arauco released data showing that in January 2023, Silver Star coniferous pulp was quoted at $920 / ton, down $20 / ton from the previous round of quotation. Not long ago, Suzano, Brazil's largest pulp company, also lowered the price of broadleaf pulp to $820 / ton, which had been hovering at $860 / ton for nearly half a year.

According to the observation and analysis of a number of institutions, with the high price of pulp expected to fall, the profit turning point of paper enterprises is expected to appear, and the profit situation of finished paper, especially cultural paper industry, will continue to improve.

Recently, the international pulp leading manufacturers have successively lowered the price of pulp, which proves that the industry's prediction of the downward trend of pulp prices has been basically established. Zhuo Chuang information analyst Chang Junting told the Securities Daily reporter that the decline in demand is the main reason for the decline in wood pulp market prices. From the performance of the past year, December is the raw material preparation period of the paper mill, and it is also the peak season of wood pulp consumption, but in December 2022, the price of coniferous pulp is dragged down significantly by demand, and it is in the downward channel, and the signs of pressure are obvious.

Zhuochuang information monitoring data show that in December 2022, the consumption of sample enterprises in the wood pulp industry was 3.17 million tons, down 3.4% month-on-month, down 10.08% year-on-year, the superimposed export volume base is small, and the total demand fell 3.4% month-on-month, down 9.87% year-on-year. In addition, during the Spring Festival in January this year, there are early closure expectations such as paper mills, and the demand level is not conducive to the volume of pulp market.

"Overall, the current industry wait-and-see atmosphere is strong, and it is expected that the spot market price of imported wood pulp in January will continue to decline." Chang Junting said.

Minsheng Securities analysis said that the downstream of wood pulp is mainly consumer goods, which is linked to the global consumption boom. In terms of profits, the cost of papermaking raw materials such as pulp in 2023 has gradually entered a downward cycle, and the profitability of domestic paper enterprises is optimistic.

"With the continuous release of new pulp capacity at home and abroad in the future, the trend of pulp and paper integration will reshape the industry pattern, the dependence on imported wood pulp is expected to decrease, and the profitability of the paper industry may be improved." Talking about the trend of the industry in the next period of time, an analyst of Zhuo Chuang information told reporters.

In recent years, domestic leading paper enterprises have continued to promote the strategy of pulp and paper integration. Taking Sun Paper industry as an example, through the development in recent years, the company has formed a coordinated development pattern of Shandong, Guangxi and Laos "three bases", with a total paper and pulp production capacity of more than 10 million tons. In 2022, the "Forest pulp and Paper Integration" project of Nanning Park of Sun Paper Guangxi Base was officially launched, and 5.25 million tons of forest pulp and paper integration technological transformation and supporting industrial park project was built in Nanning, Guangxi, to provide sufficient support for subsequent growth.

Chenming Paper also continues to increase the pulp and paper integration strategy, the company continues to improve the self-sufficiency rate of wood pulp, strengthen the cost advantage, in Shouguang, Zhanjiang, Huanggang and other major production bases are equipped with chemical pulp production lines. In October 2022, the company announced that it will invest in the construction of an annual output of 300,000 tons of coniferous wood bleaching chemical pulp project in Chenming Industrial Park, Shouguang City.

Zhuochuang information analysis that 2023 is expected to add 10.91 million tons of pulp production capacity at home and abroad, China accounted for 39%, while China's pulp and paper integration process accelerated, foreign dependence is expected to reduce, the total supply is expected to increase by 7.5%. From the demand side, 2023 is still in the paper industry capacity expansion cycle, and mainly pulp and paper integration capacity, it is expected that the concentration of the paper industry and industry profitability may improve, conducive to the steady growth of pulp demand.