GPMA Editor team

May 28, 2021

According to China CCTV financial news, the price of paper has received much attention recently. Rising prices for tissue products in many regions in China is hotly debated online. Besides, prices of cultural and wrapping paper also go up. Let’s have a closer look.

The following video is from CCTV Business Channel

Liu Shuangxi, the owner of a printing store, has a good business. However, he is recently worried about the rising price of cultural paper. According to Mr. Liu, the price soared unexpectedly after the Spring Festival. Taking the ivory board as an example, the previous price was 6,500 RMB per ton, while the current price is 13,000 RMB to 14,000 RMB per ton.

According to him, the paper price keeps increasing, while the printing price remains unchanged. Thus, his profit keeps dwindling and the profit rate has already been cut by almost 30%.

[rising paper price]

Since May, major cultural paper enterprises and traders in China have issued several notifications of price adjustment, announcing that the price of cultural paper has increased by 200 RMB per ton, and the price increase of ivory board has reached 1,000 RMB per ton.

Recently, paper prices are catching up with pork prices, which has become the most popular topic on Chinese social media. The price of tissue paper increased three times within one month. Many people commented online, “Hurry up and stock up toilet paper!” 

Zhang Siwa, a wholesaler of paper from Sichuan Province, China, goes to a paper mill to buy tissue paper before daybreak, and then sells it at a profit in the town. But now the paper mill has increased its paper price, making it hard for Zhang Siwa to make money.

However, the tissue paper price in department stores remains stable. At a chain supermarket in Beijing, a sale staff indicated that the price of all tissue paper didn’t change. Zhang GuangPing, a purchasing management professional of non-food products from the Hema grocery store, told the reporter that as his supermarket has abundant stock of tissue paper and signs long-term supply agreement with paper mills, the price of tissue paper would not increase in the short run.

Zhang, however, also said that since four major Chinese tissue paper enterprises including Gold HongYe Paper, HengAn, Vinda,and C&S Paper had issued notices of price adjustment in April this year, it was uncertain when the price would change.

Dun ZhiQiang, the secretary general of Hubei Paper Association, said, “The ex-factory prices of some tissue paper products in the market have increased by 10%-20%.”

In addition to tissue paper, on May 17^th, Nine Dragons Paper, a paper company producing the largest wrapping paper output in China, has initiated the third round of price increase since May. Within one week, its base paper price went up for every three days in average. Affected by this news, there has been a new round of price increase in the market and many paperboard mills have raised prices for the second time.

Zhang Shenjin, the secretary general of China Paper and Pulp Industry Chamber of Commerce, said,  “The major reason for pricr increase is that the upstream products and services of paper industry such as pulp, logistics, and energy have experienced a global price increase, entailing a higher production cost for paper companies. Besides, the price increase starts from a previous low base.This is especially true for the ivory board, which has a relatively large price increase.” 

The prices of pulp and paper turn upside down, and paper mills shut down.

The following video is from CCTV Business Channel

In this wave of price increase, many paper enterprises have earned large profits. Since March, however, lots of paper companies suddenly announced maintenance outage. Why?

On March 31^st, Shandong Sun Paper Industry Joint Stock announced that they would optimize their paper machines of industrial paper and coated paper in April. On April 26^th, Shandong Huatai Paper Industry Shareholding said that they planned to start the maintenance outage for machines producing coated paper in early May. On April 27^th, Shandong Chenming Paper Holdings Limited decided to initiate a ten-day maintenance outage for machines producing cultural paper.

[The prices of pulp and paper turn upside down, and paper mills shut down.]

While the major paper enterprises are stopping production, their financial reports for the first season are extrodinarily excellent. The first season net prodit of Chenming Paper is 1,170,000,000 RMB, having increased by 481.42% year on year. Sun Paper’s net profit for the first season is 1,108,000,000, having increased by 106.71% year on year. Then, why do those companies announce maintenance outage while the profits for the entire industry are increasing rapidly? 

Zhang Shenjin, the secretary general of of China Paper and Pulp Industry Chamber of Commerce, said, “The outage is because the increasing price of pulpwood leads to the paper and pulp price turning upside down. Thus, some paper mills have no other choice but to announce outage.”

In fact, the price increase of pulp is closely related to the demand for pulp. In the first quarter of this year, the imported pulp from Manzhouli Port reached 70,000 tons, with a year-on-year growth of 37%. Its total value was 260 million RMB, with a year-on-year growth of 42.1%.  

Since 2003, China has been the world’s largest importer of pulp, and the import demand keeps rising. In 2020, China’s import volume of wood pulp reached about 31 million tons, accounting for 72.8% of  domestic wood pulp consumption. Besides, its price has been increasing. According to the data, from July last year to March this year, the average increase of wood pulp price has surpassed 400 dollars per ton. 

Wood pulp is not the only one widely imported. China’s import volume of recycled pulp is also considerable. As indicated by data, China has imported totally 1.78 milliom tons of recycled pulp in 2020, with a month-on-month increase of 93.48%. The average import price has also increased apparently to 364.37 dollars per ton in February this year, an increase of 80 dollars per ton compared with that in the end of 2020.

Soaring price for domestic reclamination of wast paper resulted from the shortage of raw materials 

The following video is from CCTV Business Channel

The price increase of pulp has put considerable pressure on paper companies. At the same time, after China’s implementation of the complete ban on importing solid waste, paper companies’ import quota is therefore cleared. Facing the huge gap of regenerated fiber, China’s paper companies are employing multiple measures to improve the supply of pulp.

According to the data, in the April of 2021, the average price of yellow straw board in China is 2,140 RMB per ton, which has increased by 25% comparing to last year. As indicated by a business insider, this price increase of waste paper is related to the price increase of pulp: After the ban on imported waste is implemented, there has been a growing demand for waste paper in China. 

Tang YanJu, the secretary general of China Resource Recycling Association’s Waste Paper Sub-Association, says: “It can motivate those top recycling enterprises in these area to fully utilize its advantage of large scale and stabilize the price of the raw material and products of the downstream firms. Besides, the quality and recycling amount of domestic waste paper will also improve a lot.

Currently, China’s recycling rate of waste paper has reached 90%, surpassing developed countries such as Japan and Western countries. However, the serious shortage of waste paper still exists. 

Zhang Shenjin, the secretary general of of China Paper and Pulp Industry Chamber of Commerce, says: “To deal with the shortgage of waste paper and waste pulp, we must improve the production capacity of oversea waste pulp, encouraging Chinese companies to establish waste pulp processing factories outside of China.

This is a warehouse of a paper mill in ZheJiang. Besides imported and demostic waste paper, we can also see grey boards, which are produced by the imported regenerated pulp, which is first made into the semi-finished pulp from imported waste paper in the oversea factorys and then imported to China. This year, this company has built a factory producing regenerated pulp in South East Asia, which has already been in operation.

Currently, some of the leading paper companies from China are attempting to build factories in other countries with abundant forest resources. Nine Dragons Paper has acquired two paper mills and pulp mills, and owns a plant with production capacity of 1.6 million tons. Anhui Shanying Paper Industry has acquired or won the control of multiple pulp and paper mills in countries like Sweden and Norway. Sun Paper Industry has built new paper and pulp mills in Laos, and implemented the programs to plant forests covering 100,000 hectares in order to ensure the supply of raw material for paper and pulp.

SinoCorrugated 2021 will be held concurrenly with SinoFoldingCarton and other packaging-related exhibitions. SinoCorrugated 2021 highlights procurement of base paper and management solutions, dedicated to helping carton factories expand their choice of raw materials and save the cost of raw materials against the backdrop of paper price fluctuations. At SinoCorrugated 2021, many companies will display their flagship paper products, facilitating the one-stop procurement of raw materials for purchasers.