Corrugated Paper and Cardboard Paper Prices Likely to Fall in June
Intro: Since May, the corrugated paper and cardboard paper market has moved down, with the average prices falling M-O-M. During the May Day holiday, paper mills offered some discounts, leading to a decline in mainstream dealing prices. In late May, market prices saw more decreases, and the transaction prices showed minor changes. Looking ahead to June, it is advised to pay attention to the demand release, the destocking status and operating rates of paper mills, upstream cost changes, and large-sized paper mills’ price adjustments.
In May, the corrugated paper and cardboard paper market trended weak. According to SCI, as of May 28, China’s AA-grade 120g corrugated paper market average price was RMB 2,608/mt, down 0.31% M-O-M and 9.19% Y-O-Y. China’s cardboard market average price was RMB 3,629/mt, down 0.17% M-O-M and 8.49% Y-O-Y. The tug-of-war between sellers and buyers still existed, and the overall market trading was lukewarm.
It is advised to pay attention to the following aspects for the June market.
Demand release and paper mills’ destocking status: June is the traditional slack season of corrugated paper and cardboard paper industries, and end demand may not provide support to the market. Downstream packaging plants will still hold a cautious and wait-and-see sentiment. At present, the enterprise inventory pressure lingers, and the downstream packaging plants’ procurement has a big influence on paper mills’ destocking status. It is predicted that downstream packaging plants will probably still maintain essential purchases, with no improvement in buying interest, which will be inconducive in market prices.
Paper mills’ operating rates: According to market sources, there are no maintenance schedules at large-size paper mills, so the operating rates are expected to change limitedly. Considering costs and profitability, small and medium-sized paper mills are projected to be less active in production. From a supply-demand perspective, the market may still be in an oversupply status in June.
Cost changes: The main feedstock of corrugated paper and cardboard paper is OCC, taking up above 85% of the production. In June, the consumption of beverages and beers will likely increase, and the recycled paper will grow, pushing up the recycled volume of OCC at packaging stations. Coupled with more rainy weather, packaging stations will probably become more willing to sell. So, the waste paper supply may increase, and the OCC market prices are likely to edge down in June, giving insufficient support to the corrugated paper and cardboard paper market.
Large-sized paper mills’ price adjustments: Large-sized paper mills’ price adjustment will influence the market sentiment. The Tianjin mill of lead players announced the price increase scheduled on June 1, with the ex-works prices rising by RMB 20-70/mt, which attracts the market attention. It is necessary for end users to pay attention to the price adjustment of other mills.
Considering the above factors, it is predicted that the corrugated paper and cardboard paper market will move down in June.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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