Ivory Board and Duplex Board Price Trends Show Periodic Divergence Amid Varied Cost Support
Ivory board and duplex board price trends vary in March
Entering March, China’s ivory board market prices inched up, while the price of its alternative duplex board showed a slight decline. According to SCI, as of March 8, China’s ivory board average price was RMB 4,780/mt, up RMB 30/mt or 0.63% compared with the end of February. The average market price of A-grade duplex board was RMB 3,839/mt, down RMB 25/mt or 0.65% compared with the end of February.
The profitability of ivory board is relatively low, mainly influenced by costs. The feedstock of ivory board and duplex board is different, so their prices are influenced by cost change differently. As for the main feedstock wood pulp of ivory board, due to factors such as the increase in paper operating rates after the Spring Festival holiday, price increases, and a new round of import offer hikes, market players were reluctant to sell at lows, and pulp prices trended up. Taking SWP as an example, according to SCI, the SWP spot market price on March 8 increased by 1.19% compared with the end of February, mainly affected by main feedstock price increases. On March 8, the total cost of ivory board rose by 0.43% compared with the end of February. The overall industry faced profit losses due to poor profitability in 2023. As costs continued to fluctuate upwards after the holiday, paper mills firmly raised prices. As for the main feedstock OCC of duplex board, packaging stations rapidly resumed production after the holiday, increasing market supply. But demand was weak, so OCC prices fell overall, which was contrary to wood pulp prices. According to SCI, China’s OCC market prices on March 8 dropped by 2.53% compared with the end of February. In addition, the profitability of A-grade duplex board was better than that of ivory board. So amid weak cost support, the possibility of paper mills lowering prices to entice sales was increased.
The price strategies of large-sized paper mills vary, giving different guidance to the market. After the Spring Festival holiday, large-sized ivory board mills firmly raised prices and posted price increase notices of RMB 200/mt for March, and then in early March, they posted price increase notices by RMB 200-300/mt for April. Affected by paper mills’ price hikes, traders faced higher cost pressure and became more reluctant to sell at lows. Some traders tentatively raised re-sales prices by RMB 100/mt. The mainstream dealing prices started to move up. For duplex board, from the end of February to early March, large-sized paper mills successively offered price discounts and lowered prices by RMB 50-150/mt, and surrounding mills also lowered prices. The price strategies of ivory board and duplex board mills varied, giving different guidance to the market, so the price trends showed divergence.
Amid overall weak end demand, the price spread between ivory board and duplex board may change limitedly
Due to the divergence between ivory board and duplex board price trends, the price spread became slightly larger. But from the perspective of end demand, ivory board and duplex board have similar consumption attributes and application scenarios, so the influence from demand was consistent. New orders from downstream players are limited, and overall demand is insufficient, so amid abundant supply and weaker cost support, the duplex board market starts to drop. As for the ivory board market, the prices have relatively good resilience due to high capacity concentration and high costs. However, the market trend is always dominated by supply and demand. Currently, the implementation of price hikes is below expectations, which is mainly affected by weak demand. In terms of market supply and demand, the ivory board and duplex board markets both have abundant supply and insufficient demand. In the short term, the supply may be relatively stable, so the market will be more influenced by demand changes. Therefore, the price spread between ivory board and duplex board is expected to change limitedly amid similar supply and demand and main price drivers.
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