Container Board Market Remains Range-Bound During Traditional Peak Season
In September, the corrugated paper and cardboard paper market remained stable, and medium and small-sized paper mills adjusted offers based on their own situations. As the autumn peak season approaches, the end consumption is expected to increase, which may provide demand support for the packaging paper sector. However, the market performance during the traditional peak season may be more sluggish this year, and the corrugated paper and cardboard paper prices are expected to remain range-bound amid tepid moderate trading.
Since September, the corrugated and cardboard paper markets have mainly trended downwards. According to SCI, as of September 13, the average market price of AA grade 120g corrugated paper was RMB 3,419/mt, flat from late August but down 13.09% Y-O-Y. The average market price of cardboard paper was RMB 4,625/mt, down 0.06% from late August and 4.68% Y-O-Y.
Both supply and demand were weak, and players tended to remain on the sidelines.
In September, leading paper mills announced maintenance schedules that last for 2-30 days, and some paper mills held above-normal inventory. As for downstream demand, orders from packaging companies were decent but were still lower Y-O-Y. Most buyers remained cautious and purchased on a need-to basis.
Waste paper prices slipped, leading to a rebound in gross profit
Since September, the waste paper price had been decreasing. According to SCI, as of September 13, the market price of domestic OCC was RMB 2,030/mt, down 3.33% from late August and 16.67% Y-O-Y. On the one hand, the waste paper price was affected by tepid sales in downstream packaging paper markets, and on the other hand, the supply of OCC was expected to ramp up during festivals. But overall, the corrugated paper and cardboard paper price drops were smaller than feedstock price drops, and the gross profit recovered slightly from late August.
The market is amid a wait-and-see sentiment
SCI has conducted a survey on 46 medium and large-sized paper mills, packaging plants and end users regarding the market prospect. Around 20% of the participants showed bearish attitudes due to limited new orders and falling waste paper prices. Some expected the price to drop further near the National Day holiday in October. Around 70% of the participants held a wait-and-see sentiment and expected the market to trend sideways depending on market supply-demand changes and leading players’ price adjustments. Only 10% of the participants showed bullish attitudes because of the anticipated demand release near the Double 11 e-commerce shopping fest and extensive maintenance schedules in the packaging paper industry.
Market downward is expected to persist in the short term
SCI reckons that the downtrend in corrugated paper and cardboard paper markets may continue in the short term. Factors affecting the future market trend are as follows. First, leading paper mills still face a certain inventory pressure, and in comparison, the cardboard paper inventory pressure is higher than that of corrugated paper. Second, Mid-Autumn Festival-related orders come to an end, and market participants are cautious about the demand increase before the Double 11 e-commerce shopping fest. Most of them tend to purchase on a need-to basis. Last, the feedstock waste paper price is expected to trend downwards, and the cost pressure may be sloppy. In conclusion, the corrugated paper and cardboard paper markets may mainly trend sideways.
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