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

(3) PPI growth in the paper industry continued to fall

From the perspective of the inventory cycle, the active replenishment of the domestic paper industry probably began after the epidemic, and it has begun passive replenishment in the first quarter of 2021, and then it has entered the active destocking stage of up to half a year, which can be verified from the output and inventory data. Into the fourth quarter of 2021, gradually began passive destocking, prices, production have stabilized, but the end demand is still weak, from the historical data of paper production and price growth, the two outside the shock period, about 7-9 months of time, so in June 2021 domestic paper production year-on-year growth declined, September negative growth, It is expected that the year-on-year growth rate of the paper industry has not bottomed out, and the year-on-year growth rate will continue to decline in the first half of 2022, while falling into negative growth, considering the base problem, the PPI growth rate of the paper industry will bottom out or around August 2022.

(4) The proportion of downstream demand for wood pulp has gradually changed

From the change in the terminal demand for pulp in the last 10 years, from 2010 to 2019, the proportion of household paper in the terminal demand for conifer pulp increased from 37% to 42%, the proportion of printing paper decreased by 10% to 27%, the proportion of household paper in the demand for broadleaf pulp increased by 6% to 43%, and the proportion of printing fell by 5% to 30%. In the coming years, this trend will continue, with the proportion of household paper in needlewood pulp demand likely to rise to 47%, printed writing paper falling to 18%, and specialty paper rising slightly. Therefore, the impact of household paper on the future demand for coniferous pulp will continue to increase, and will also affect its price, but the demand for household paper is rigid, small fluctuations, if the trend of demand changes as expected, for pulp, the impact of supply on its price will be further enhanced.