Corrugated and containerboard market review and second-half forecast for the first half of 2019
Corrugated and Boxboard Paper Market Overview in the First Half of the Year
Since the beginning of 2019, domestic corrugated and containerboard paper prices have risen first and then moved upward. In January and February, paper prices were mainly upward, mainly due to the rise in the price of waste paper, which was supported by the increase in costs. Secondly, the New Year period downtime maintenance paper enterprises more, the mall supply is slightly serious. Other is in the New Year before and after the downstream stocking season, the mall demand is still reflected. And since March future along with new capacity into and downstream demand turned light, mall supply and demand contradiction has increased, paper prices began to enter the downward channel. Special planning paper enterprises repeatedly cut prices and volatility, resulting in a lack of confidence in the field, the center of gravity of the mall transactions continue to move down. According to statistics, the average price of corrugated paper in the first half of 2019 was 3,658 yuan per ton, down 13.62% sequentially and 17.24% year-on-year; the average price of boxboard paper was 4,043 yuan per ton, down 9.88% sequentially and 14.93% year-on-year.
Analysis of the reasons for the fall in paper prices
Paper prices fell in the first half of 2019 is mainly caused by the following aspects: the primary new production capacity into, the mall supply increased. According to statistics, new domestic corrugated and boxboard paper production capacity was close to 3 million tons in the first half of the year, with new corrugated paper projects in Shandong Bohui Paper with an annual capacity of 750,000 tons. New projects put into operation for the mall to bring greater supply pressure.
Secondly, the market demand is not strong, packaging enterprises orders are limited. The two or three factory is not high enthusiasm to start, together with the original paper procurement mentality cautious, further depress the original paper inventory level, and then lead to paper enterprises inventory pressure.
Again material waste paper prices fell, the cost side support lack. Since the beginning of the year, the national waste price adjustment frequently, the whole trend downward running, the material cost reduction, the downstream pressure psychology appeared.
Finally, the mall bearish mentality is strong, resulting in paper prices easy to fall difficult to rise. Corrugated and boxboard paper market market after nearly 3 years of rapid rise, since the second half of 2018 began to show weakness, along with the contradiction between supply and demand gradually highlighted, the mall mentality bearish mood aggravated, and then lead to paper prices increased.
Corrugated and containerboard prices are in a downward trend, and paper enterprises’ profits are becoming more and more meager. Take corrugated paper as an example. According to statistics, the gross profit margin of corrugated paper in the first half of the year was 13.55%, down 1.49 percentage points year-on-year, and the gross profit was only 497 yuan per ton, while the profit margin was very limited after deducting other financial costs of paper enterprises. Especially in April and May, the price of waste paper remained high, which led to the price of the actual transaction remaining below the cost line.
Forecast for corrugated and containerboard malls in the second half of the year
Some paper enterprises still have new projects in production. It is estimated that 4-5 million tons of new projects will be put into production in the second half of the year, increasing competition in the market. In addition, there is room for a downward spiral in the price of waste paper, and the corrugated and containerboard malls are still weak in the third quarter under the influence of negative costs. However, the fourth quarter is after all the traditional peak demand season, so it is estimated that prices may rise slightly in the fourth quarter, but the industry’s overcapacity is also responsible for the lack of momentum.