Coated Paper Price Drops to Annual Lows Lacking Demand Support
Affected by insufficient demand support, China's coated paper prices fell to a yearly low in August. Although some production lines underwent maintenance shutdowns during the month, weak market demand and slow inventory digestion kept coated paper prices under downward pressure. In September, expectations for demand improvement remain limited, and with plans to restart some idled lines, supply pressure is likely to increase. It is anticipated that coated paper prices may still decline.
Coated paper market prices hit yearly lows
Over the past month, the coated paper market entered a downward trend, with prices dropping to yearly lows. SCI data shows that as of August 28, the market price for 157g coated paper in China was RMB 5,070/mt, down 6% MoM. After the completion of publishing order deliveries, downstream printing plants mainly consumed existing inventory, while new orders were limited. Traders faced inventory pressure, in addition to the anticipated capacity restart at Chenming, they cut prices to destock and brace for potential impacts.
Weaker export demand plus continuously sluggish domestic sales
Since Q2, China's coated paper exports have declined overall due to weak overseas demand, with paper mills struggling to secure export orders. Data from China's General Administration of Customs shows that coated paper exports in July totaled 148.7 kt, down 3.84% MoM and 8.37% YoY. Domestically, coated paper is used not only in publishing materials like textbooks but also in commercial printing such as advertising leaflets, brochures, business cards, and packaging. By August, deliveries for publishing orders had largely concluded, while commercial activity remained subdued, placing coated paper demand in a seasonal lull. SCI estimates that domestic coated paper consumption in August is to fall by 14.47% MoM.
Lower production enthusiasm among paper mills, with market-related downtimes
With weak demand both domestically and internationally, traders' willingness to procure declined, slowing the circulation of market supply. Overall order intake remained mediocre, dampening paper mills' production enthusiasm. In August, some production lines in East China underwent temporary downtimes. Additionally, rising wood pulp prices in August increased industry cost pressure, further impacting mills' willingness to operate. SCI data indicates that in August, the operating rate for China's coated paper industry stood at around 61.51%, down 1.09pp from the previous month.
Few bullish factors in sight, coated paper prices may continue falling in September
On the supply side, large-scale production lines in the industry are operating normally, while some idled lines of Chenming are scheduled to resume production in September, maintaining a loose supply outlook for coated paper. On the demand side, order status shows no signs of recovery, with traders still prioritizing destocking and adopting a cautious approach to procurement. Moreover, new publishing tenders have yet to commence, making a near-term demand rebound unlikely. Overall, with little positive support for the coated paper market, prices are expected to decline further by RMB 100-200/mt in September.
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