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Paper Prices Fell! The Market Is The Dealer, What Will Be The Next Paper Price?
Apr 09, 2018

The price rises like a landslip, and the price drop is fine! Using this sentence to describe the ups and downs of the paper packaging industry is just right.

Since 2018, the price of paper has been immersed in endlessly rising voices. After all, the extra revenue from the big price increase has already left the paper mills unable to stop. However, it is not determined by the strong will of the paper mill but by the market. Into the end of March, after the paper mills turned over and over again, the market finally gave the correct answer: paper prices fell!

Orders "doors cover dusk, no stay in spring stay"

Since 2017, the prices of all kinds of paper products in the country have started to rise, and by 2018, the rise in paper prices has not only failed to stop but has intensified, and more than 30 original paper mills have recently announced an increase in the ex-factory price. A new wave of raw paper price surges struck. The rise in paper prices has not only led to a substantial increase in the prices of domestic paper, but has also affected the public. At the same time, it has also affected the logistics industry, which has increased the cost of logistics.

In the entire paper packaging and printing industry chain, both packaging and printing companies and the industry's own media, almost uniformly believe that the price of paper is apt to rise and fall, and that the paper mill can control everything. On the other hand, restrictions on environmental protection and imported waste paper further reinforce this idea.

In the upstream papermaking industry, industry leader Nine Dragons Paper Co., Ltd. has set a target of 13 million metric tons for fiscal year 2018, which means that output in the second half of fiscal year 2018 will increase by 14% year-on-year (down 8% year-on-year in FY2017). Moreover, Nine Dragons Paper also believes that product prices are not expected to fluctuate as in the first quarter of 2017, and prices may be higher.

However, there was only one answer given in the final market. Wrappers first started out from the weakest corrugated paper prices, and some small and medium-sized paper mills gave 100+200 discounts in two days. For no reason, the order "dark cover the door and no count stay in spring", the cold market eventually frozen the fiery market confidence.

Price increase is easy, but conduction prices are too difficult

For a long time, some paper workers with ulterior motives continue to convey a viewpoint to the downstream: As long as the price rises, it is acceptable for the downstream to accept it.

But, is this the truth?

Mr. Yuan, an e-commerce shopping expert in Jinan, discovered a strange phenomenon: “Before they were all special corrugated cartons, they now often receive packages that use other product boxes. The previous courier would have carton packaging. Now they can use product boxes. It's good to do packaging. Often the package is only one plastic bag. Even the box is saved. The reason is precisely because of the rise in paper prices and the increase in the cost of courier boxes.

Mr. Sun from Taobao said: “For example, peers selling daily necessities, such as clothes racks and soap boxes, are generally 9 pieces of 9 bags. By relying on the amount of profit, their profit rate is very low, and plastic The products must not be tossed and must be packed in carton packs. After the price of the express cartons has risen, almost no profit has been made."

Data show that in 2017, the national average price of corrugated paper was 4,072 yuan/ton, which was 51% higher than that of 2,697 yuan/ton in the previous year. Affected by this, single corrugated box prices rose by 15% to 25%, while various types of packaging products accounted for about 12% to 15% of the cost of express delivery companies. According to industry insiders, the general courier fee will not exceed 10% of the item price. If it is higher than this standard, consumers will choose to buy offline. Therefore, in the dilemma of price increase and profit, many businesses chose to abandon the carton.

2018 paper prices will continue to rise?

Paper prices are undergoing a wave of corrections and basically have become facts. At present, the entire packaging and printing industry is circulated with the same kind of sound, that is, 2018 will be a relatively violent inflation, so the paper price will still oscillate at a high level and even exceed the high level of last year.

This issue is a matter of life and death for the packaging and printing companies in the middle reaches.

Xiao Bian feels that it should use development perspective to see the problem. The country's macroeconomic policies are not so easy to see. Due to external factors, there is no possibility of deflation. For example, in the recent past, the country began to compress infrastructure, de-leveraged enterprises and residents, and raised the exchange rate of the renminbi against the U.S. dollar. For example, these measures were all directed toward deflation. If this policy is continuously implemented, it means that the demand for packaging paper will shrink drastically, and the price of paper may be depressed.

In addition, some individuals in the industry even gave a floor price of 3,800 yuan to corrugated paper, and they think that it will never be lower than this price.

In fact, there has never been a floor price when the supply of commodities is oversupplied and the inventory is indigestible. Last week, steel fell below the cost price. Will corrugated papers fall below 3,800 yuan/ton next month? What's more, waste paper completely manipulated by paper mills can fall off at any time, and imports and wastes are also cheaper than national waste paper by 1,000 yuan/ton.

In March, it will be the traditional off-season in April and May. How will the paper price trend be? What do you think?

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