Coated Paper Production to Rise in Nov-Dec Amidst Downstream Restocking
Due to weak market demand and significant cost pressure on paper mills, the operating enthusiasm in the coated paper industry declined in October. With publishing tenders starting on a full scale during November, the expected publishing orders may drive demand recovery. Additionally, the anticipation for a rebound in paper prices will also boost paper mills' production enthusiasm. Thus, the coated paper Industry operating rate is expected to pick up from November to December.
Operating Rate Declined in October
SCI data shows that the operating rate of the coated paper industry in October was 64.71%, down 0.60pp MoM, while monthly output increased by 2.39% MoM. The market demand was still affected by the off-season, and traders’ intention for restocking was low with poor order books. On the other hand, paper prices continued to fall, while cost-side fluctuations were relatively limited, leading to significant production cost pressures in the industry and resulting in a theoretical production loss. Weak demand and cost pressures reduced paper mills' operating enthusiasm. However, as October has more calendar days, the output still increased MoM with most large-sized players maintaining normal production.
Publishing Tenders Not Yet Started, Social Orders Weak
After the National Day holiday, the demand for coated paper showed no signs of improvement. Downstream printers operated at relatively low rates, orders for commercial printing and packaging saw limited improvement, and the new round of publishing tenders had not started on a large scale, resulting in considerable market wait-and-see sentiment. Traders mostly continued to destock, leading to softened shipment prices. SCI estimates that China's coated paper consumption in October 2025 decreased by 2.65% MoM.
Falling Prices Squeezed Paper Mills’ Profits
In October, upstream wood pulp spot market prices saw more declines than rises. The material cost for coated paper shifted slightly downward. However, the industry's supply-demand contradiction was prominent, and market prices continued their downward trend, leading to declines in theoretical profit levels. By the end of October, the monthly average price of domestic 157g coated paper was RMB 4,793/mt, down 3.29% MoM. The theoretical gross profit rate was -3.91%, down 3.26pp MoM.
Demand Recovery May Drive Operating Rate Rebound in Nov and Dec
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