Coated Paper Market Prices Rose After Stabilizing in Feb and Likely to Show an Uptrend in Mar
Coated paper prices rose after stabilizing in February
In February, coated paper market prices first remained stable and then moved up. First, affected by the Spring Festival, distributors and some downstream printers started to take holidays around February 2, and market trading came to a halt during the holiday. So, market prices remained stable in the first half of February. Second, after the holiday, distributors gradually returned to the market, and downstream printers resumed production after the Lantern Festival (Feb 24), so demand slightly warmed up, giving certain support to the market. Third, pulp prices fluctuated upwards after the holiday, lending cost support. Amidst multiple bullish factors, paper prices started to pick up at the end of February, with some low-end prices ticking up. As of February 27, the average market price of 157g coated paper was RMB 5,840/mt, up RMB 100/mt or 1.74 M-O-M.
Coated Paper Market Price Change
Demand and cost both underpinned the market in February
In terms of inventory, the inventory at coated paper enterprises first rose and then declined in February. As of February 27, the inventory days of domestic coated paper mills decreased by 0.78% M-O-M. In H1 of the month, affected by the Spring Festival holiday, downstream players closed down and logistics became slower, so the enterprise inventory mounted up. After the holiday, as logistics recovered and downstream players adequately restocked after resuming production, the enterprise inventory went down. For prices, the demand side gradually bolstered the paper prices.
In terms of cost, the spot market of imported wood pulp showed varied trends. Therein, SWP and HWP prices fluctuated upwards after the Spring Festival holiday. As of February 27, the average spot market prices of SWP, HWP and CMP were RMB 5,945/mt, RMB 5,247/mt and RMB 4,200/mt respectively, up 2.03%, 4.62% and down 1.56%. The main feedstock cost of the domestic coated paper industry rose by 2.97% M-O-M. Backed by higher costs, paper mills raised prices, further driving up the market prices.
Paper mills maintain firm offers and the industry enters demand peak season, driving up the paper prices
Demand: The culture paper industry will start to enter the peak season in March. Tenders for publications will successively start, and some party-building orders may be released, so demand overall is expected to warm up. At the same time, downstream players may adequately restock, which will be beneficial for destocking at paper mills. Paper mills may maintain firm prices, further boosting market players’ confidence.
Cost: The spot wood pulp market prices may fluctuate upwards. Besides, for paper mills, the pulp to arrive in March is mainly the imported pulp ordered in February. However, the imported offers for SWP inched down while those for HWP inched up, with the fluctuation range being $10-20/mt. Overall imported offers were relatively high, putting cost pressure on paper mills. Therefore, this may support paper mills to proactively implement the price hikes.
Supply: Coated paper mills have no newly added capacity plans. With growing downstream demand, paper mills will sustain proactive production. Coupled with more calendar days, the output in coated paper mills is predicted to improve M-O-M in March, but the influence of supply on the paper prices may be not apparent.
On the whole, paper mills will continue to raise prices and demand is expected to increase. Coupled with higher pulp prices, the coated paper market prices may go up.
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