Ivory Board Market Prices Tick Up but Still Face Resistance
Intro: Amid poor industry profitability, ivory board producers were less active in arranging production. Supply tightened with the paper mills reducing production and destocking, giving favorable factors to market prices, and enhancing trading confidence. As a result, sellers attempted to raise prices. In the short run, the market demand is likely to be limited, and downstream players hold a cautiously wait-and-see sentiment to price increases, putting certain pressure on the price uptrend. It is predicted that ivory board mainstream prices will remain stable, with fewer low-end prices in some regions.
Market prices were tentatively raised, but actual transactions were below expectations.
After lingering at lows in H2 of May, ivory board market prices started to increase by RMB 50-100/mt in early June. Some traders raised offers, and downstream players became active in inquiries. However, due to sluggish orders and cautious purchases of clients, most dealing prices showed no apparent increases, despite fewer low-priced transactions. According to June 7, China’s ivory board average price was RMB 4,350/mt, unchanged from the end of May.
Industry profitability remains negative due to high costs, and paper mills maintain firm offers.
Entering June, the pulp price trends varied. Due to poor profits, paper mills were inactive in buying high-priced pulp. Besides, pulp dominate futures contract prices at SHFE slightly fluctuated downwards, so SWP and HWP spot prices accordingly inched down but still hovered at highs. Affected by this, ivory board producers still suffered high cost pressure, and paper sales prices were less than costs for a long time, leading to a bottom level of industry profitability. Therefore, ivory board producers were inactive in production but they attempted to maintain firm offers. The high costs still gave bottom support to the market trend.
Supply tightened amid paper mills’ production reduction, bolstering market uptrend.
Recently, paper mills have generally reduced production to alleviate the supply pressure. Large-sided paper mills shut down for maintenance or switched some lines to produce cup paper, food-grade ivory board, and other grades from May, reducing the inventory pressure for June. Currently, a line in South China was shut down for maintenance, and lines in East China were arranged for differentiated production. The output of commodity-grade ivory board recovered limitedly. Medium and small-sized mills mainly consumed inventory, and the restart time has not been determined. The decline in operating rates and output effectively alleviated the sales and production pressure of producers, and underpinned the market sentiment, thereby improving clients’ buying enthusiasm. According to market feedback, the commodity-grade ivory board orders at some producers were sufficient, and some grades of orders were limited. Under this context, enterprises proposed market price increases, and traders attempted to raise prices to improve their profitability.
Limited downstream orders put resistance to price hike implementation.
June is the traditional demand slack season for the ivory board market, end orders are insufficient, and downstream players’ buying appetite is weak. Currently, domestic consumption is recovering slowly, and market sentiment remains bearish, so downstream clients are less attracted by price hikes and become more cautious in buying. In general, amid lukewarm domestic demand, paper mills’ production reduction will tighten market supply, helping market prices stop falling and stabilize. However, market price hikes lack momentum. Traders will probably continue to slightly raise prices in the short run. It is predicted that mainstream market prices will probably remain stable, and there may be fewer low-end prices in the market.
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