Overview of corrugated and box board market in the first half of the year

Since 2019, the domestic corrugated and carton board market prices have shown a trend of first rising and then rising. From January to February, the paper price mainly fluctuated and rose. Firstly, due to the rising price of raw waste paper and the increase of cost, the paper enterprises have a strong willingness to rise. Secondly, during the Spring Festival, many paper enterprises shut down for maintenance, and the market supply is slightly tight. In addition, it is in the peak season of downstream goods preparation before and after the Spring Festival, and the market demand performance is acceptable. Since March, with the launch of new production capacity and the weakening of downstream demand, the contradiction between supply and demand in the market has intensified, and the paper price began to enter the downward channel. Especially large-scale paper enterprises have reduced prices for many times and the range is too large, resulting in lack of confidence in the audience and the continuous downward shift of the focus of market transactions. According to statistics, in the first half of 2019, the national average price of corrugated paper was 3658 yuan / ton, down 13.62% month on month and 17.24% year-on-year; The national average price of box board paper was 4043 yuan / ton, down 9.88% month on month and 14.93% year-on-year.

Analysis on the reasons for the decline of paper price

The decline of paper price in the first half of 2019 is mainly caused by the following reasons: first, the launch of new production capacity and the increase of market supply. According to statistics, up to the first half of the year, the domestic corrugated and carton board production capacity has increased by nearly 3 million tons, of which the annual production capacity of the new corrugated paper project of Shandong Bohui paper industry is 750000 tons. It is reported that another carton board production line with an annual production capacity of 750000 tons has been put into operation since June 2. In addition, Shandong Meijie, Zhejiang Hehong environmental protection, Henan Longyuan Enterprises such as Hubei Rongcheng and Hebei SHUNFA have released new production capacity, and the production of the above new projects has brought greater supply pressure to the market.

Secondly, the market demand is not booming, and the orders of packaging enterprises are limited. The second and third level plants are not very motivated to start construction, and are cautious about the purchase of base paper, further reducing the base paper inventory level, resulting in pressure on the inventory of paper enterprises.

Thirdly, the price of raw material waste paper fell, and the cost support was insufficient. Since the beginning of the year, the price of domestic waste has been adjusted frequently, the overall trend is running downward, the cost of raw materials is reduced, and the downstream price Depression Psychology appears.

Finally, the market has a strong bearish mentality, resulting in paper prices that are easy to fall and difficult to rise. After nearly three years of rapid rise, the corrugated and box board market began to show fatigue since the second half of 2018. As the contradiction between supply and demand gradually became prominent, the market mentality became more empty, resulting in an increase in the decline of paper prices.

Profit analysis

Corrugated and carton board prices are in a downward trend, and the profits of paper enterprises are even thinner. Taking corrugated paper as an example, according to statistics, the gross profit margin of corrugated paper in the first half of the year was about 13.55%, down 1.49 percentage points year-on-year, and the gross profit was only 497 yuan / ton. After deducting other financial costs of various paper enterprises, the profit space was very limited. In particular, the price of raw material waste paper remained high in April and may, resulting in the actual transaction price continuing to be below the comprehensive cost line.

Corrugated and carton board Market Forecast in the second half of the year

It is expected that the market will not improve significantly in the second half of the year. Some paper enterprises still have new project production plans. It is expected that there will be 4-5 million tons of new projects in the second half of the year, and the market competition will intensify. In addition, there is room for the price of raw material waste paper to decline. Under the influence of bad costs, the corrugated and carton board market remained weak in the third quarter. However, the fourth quarter is the traditional peak demand season after all. Therefore, it is expected that there may be room for a slight increase in market prices in the fourth quarter, but the overall momentum for a sharp rise is insufficient due to the overcapacity of the industry.