Pulp-Paper Integration Capacity Becomes Mainstream
In 2023, the newly added capacity of uncoated woodfree paper reached 1,460kt/a, and the net growth rate of capacity reached a new high of 9.60% in the past five years. The profitability of the uncoated woodfree paper industry was passable. The newly added capacity of paper mills was released as planned, and part of the capacity in 2022 was also postponed to release in 2023. Therefore, the growth rate of capacity in 2023 moved up significantly.
In recent years, the release of newly added uncoated woodfree paper capacity has mostly been concentrated in leading players. Large-sized paper mills have continued to expand the scale of production lines by promoting the pulp and paper integration project. At the same time, they improved the market share by optimizing feedstock and transportation costs and adding new mills. Among the newly added uncoated woodfree paper capacity in 2023, integrated pulp and paper capacity accounted for nearly 70%, and the release of integrated pulp and paper capacity became mainstream.
The newly added capacity was distributed in East China and South China, and most is the planned capacity expansion of large-sized paper mills, mainly in Shandong, Fujian and Guangdong. In 2023, the uncoated woodfree paper capacity accounted for 26% in South China, up 4 percentage points Y-O-Y, and the capacity in South China was mainly located in Guangxi and Guangdong. East China was still the region with the highest proportion of uncoated woodfree paper capacity, with Shandong and Jiangsu having the most concentrated capacity.
Uncoated woodfree paper market prices may sustain a seasonal fluctuation in 2024
It is predicted that the newly added capacity of uncoated woodfree paper will be around 1,870kt/a in 2024, but the demand may see no apparent increase. The oversupply pattern may still exist in phases. Some lines may switch production, so the output in 2024 is expected to move down Y-O-Y, leading to a lower capacity utilization rate. In terms of demand, the overall number of newly enrolled students will increase in 2024 although the growth rate may be slower than that in 2023. Coupled with the promotion of teaching material revision, rigid orders for textbooks and tutorial materials and party building may still underpin the market. The order release pace will influence the market price trend. Besides, with the trend of electronic reading and office work, social demand and book orders are expected to decrease. Overall demand growth may be limited.
In general, with the further expansion of newly added capacity, the supply of uncoated woodfree paper will tend to be ample, and the influence of order release pace on the market will pick up. In 2024, publication demand and party-building demand will still steadily support the market. Social demand is expected to slowly recover, and prices are likely to move up during the procurement peak season. However, the market supply pressure will increase with the release of newly added capacity, and the supply-demand imbalance may appear. In addition, the cost will probably slightly fluctuate downwards. As a result, the uncoated woodfree paper prices may fluctuate in line with the peak and off-peak seasons.
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