Ivory Board Price Rise to Boost Duplex Board Performance?
SCI data indicates that the weekly average ex-works price of grade A 250g grey back duplex board is RMB 4,305.0/mt (Aug 14 – Aug 20), flat W-O-W. Although producers have held their offers stable, the inventory still rises slightly. The inventory at medium-to-small sized mills is even higher, and shutdowns are regularly seen in East China, South China and Central China.
The main reasons for ivory board producers to push the price higher are 1. Bohui Paper reallocates the production of Yunfan ivory board to its production base in Jiangsu. Although Yunfan is an ivory board grade, is positioned to substitute duplex board in the market. Therefore, a considerable amount of supply will be subtracted from the ivory board market, creating scarcity. Second, the market demand is expected to recover, and market players hold a bullish sentiment towards the market in H2. Third, the ivory board inventory has decreased slightly, and paper mills are confident that the implementation will be successful because of the high market concentration ratio.
Regarding whether duplex board producers will follow the price rise, SCI reckons:
First, the Yunfan ivory board is positioned as a substitute to duplex board. The thickness of the 200g Yunfan ivory board is 29mm, which can perfectly replace the 250g Land Dragon duplex board with higher cost-effectiveness. At present, the monthly output of Yunfan ivory board in Shandong is roughly 10-20kt during July and August. Before then, South China is not included in the sales area of Yunfan. If Bohui reallocates the production to Jiangsu, the output will surge to 90kt every month, and the sales will cover a wider market range. Also, there will be newly added duplex capacity being released in Shandong and Henan during September, and the competition will become tougher for existing players. However, as the final ban on waste paper imports will come into effect at the end of 2020, the waste paper prices in China are not likely to decrease. If duplex board producers fail to follow the price rise, their profit will be severely affected by low-priced competition.
