Cultural Paper Market Uptrend Likely to Last in March
Introduction: Paper mills actively increased prices after the frequent announcements of cultural paper price increase notices in February. After the Spring Festival holiday, market sales recovered somewhat. Backed by stronger demand, market prices rose marginally in some areas. March marks the peak season for paper when there were increasing publishers’ orders. The mainstream market price of cultural paper may go up in the midst of sound demand.
Mainstream Price Inched up Due to Paper mills’ Attempts to Raise Prices
After the Spring Festival holiday, market orders fared well, and downstream printers stocked up moderately in February. Strong demand, low profits and upcoming peak season spurred cultural paper mills to announce price increase notices and raise prices in a real sense in mid-February. Meanwhile, some downstream distributors raised prices by a narrow margin, pushing up mainstream market prices slightly. As of February 28, the average price of uncoated woodfree paper in China was RMB 6,725/mt, up RMB 75/mt or 1.13% M-O-M. Prices of China-made coated paper averaged RMB 5,800/mt, up RMB 210/mt or 3.76% M-O-M.
Recovery of Demand Relieved the Imbalance between Supply and Demand
There was recovered demand, as major orders placed during the Spring Festival holiday were met in February. Paper mills posted price increase notices and followed up orders in mid-February, and downstream players showed recovered buying appetites, so some paper mills already saw better sales. In this sense, most production lines under maintenance during the Spring Festival resumed production, increasing the overall operating rate in February amid decreasing inventory. What merits attention is that the recovery of demand for coated paper fell short of expectation. Despite a drop, the coated paper inventory remained high.
According to SCI, the operating rate of uncoated woodfree paper in February increased by 11.79% M-O-M, while the inventory dropped by 4.54% M-O-M. When it comes to coated paper, the figures went up by 10.14% and slid 1.76% M-O-M respectively.
Peak Season Opens the Door to Price Increases
Supply: No plans for adding new capacity are heard in March, while most paper mills maintain normal operation, leaving few changes in output. Coated paper inventory remains high, with the pressure hardly dissolved. By comparison, the inventory of uncoated woodfree paper is low.
Demand: As the peak season approaches, publishers’ orders from tenders may be released gradually in March. Supported by such demand, cultural paper prices are likely to rise.
Cost: Pulp prices may further slide, offering weak support to the cultural paper market.
To sum up, the pressure from supply-demand imbalance on cultural paper may be dissolved somewhat. It’s especially the case for uncoated woodfree paper, which is supported by publishers’ orders from tenders. Besides, the rather inelastic demand brings stronger support, and the price is expected to trend up. However, the supply-demand imbalance remains grave due to a slower-than-expected demand recovery. It is predicted that coated paper prices may fluctuate within a narrow range, influenced by industrial profits under pressure and the combination of cost and demand.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
