Looking forward to 2024, we believe that industry demand is expected to continue the moderate pace of recovery, the peak of production capacity release as a whole is coming to an end, the cost of wood pulp, waste paper, coal prices are mainly moderate fluctuations, and industry profitability is expected to steadily repair.
The paper industry is known as the “barometer of consumption”, with the first recovery of the consumption scene and the flow of people, the prosperity of cultural paper has been significantly restored, the leading volume, price and profit have been significantly boosted, the demand for wrapping paper and special paper also follows the physical goods have a moderate repair in the low single digits, 2023 product prices and profits are also significantly improved. Looking forward to 2024, it is expected that the social zero will continue the moderate recovery trend, the demand for cultural paper will steadily increase, and the demand for wrapping paper (box board paper, white card) and special paper will continue to recover in the mid-single digits. We just need to wait for the supply and demand side to return to a tight balance.
At present, the paper industry is at the end of a new round of expansion peak (driven by the boom peak of 2020-21, and the concern of enterprises about the difficulty of expansion after the strict “dual carbon” policy). Capacity expansion is concentrated in 2022-23 (box board corrugated paper also bears an additional supply shock of about 50% of imported paper). In 2024, we expect the supply and demand balance of cultural paper and some thin special paper to be relatively tight, and the new production capacity of box board corrugated paper, white cardboard and some special paper will still be in the mid to high single digits, and the supply and demand side depends on the improvement of demand. However, from the existing production schedule, we expect that the pressure of new production capacity will be significantly eased in 2025-26, such as demand to accelerate repair, the industry’s overall supply and demand side is expected to return to a tight balance in advance. In addition, leading paper enterprises will enter the harvest period, its cost from the “roller coaster” to smooth, leading the diversification + integration layout into the harvest period. Due to the certain contradiction between supply and demand, the profit of the paper industry in 2022 suffered from the extrusion of coal prices and pulp, and the price of raw materials fell sharply in 2023, and the price competition of base paper intensified, resulting in the loss of industry profits. The challenges facing the cost side of the industry are expected to ease significantly in 2024: we expect pulp prices to continue to fluctuate around $600 / ton, and waste paper prices to continue to wear down, which is expected to support the overall modest recovery of industry earnings. In addition, in order to smooth cost fluctuations, a number of leading efforts to promote product diversification, high-end, on the one hand, actively promote the integration of forest pulp and paper layout, 2023 to 2024, the diversified products and homemade wood pulp of these companies are expected to enter the harvest period, we are expected to increase the company’s safety margin and growth momentum.
Post time: Dec-11-2023