According to the Zhitong Finance APP, Guotai Junan has released a research report stating that the paper industry is entering a peak demand season. Previously, the price of pulp has risen, terminal demand has catalyzed, and production stoppage events have resonated, leading to frequent letters regarding paper products. Coupled with the replenishment of wood pulp at ports, rising costs, and production cuts, the price of paper is expected to gradually increase. As low-priced wood pulp is consumed, the industry's profit elasticity is promising. Meanwhile, leading domestic companies have accelerated their integration of forestry, pulp, and paper since 2024, which is expected to further solidify their comprehensive cost competitiveness and smooth out fluctuations in raw material price cycles.
<h2>Guotai Junan's main points are as follows:</h2>
Port wood pulp replenishment, rising costs, and production cuts jointly drive continuous price increases for pulp
On January 24, 2025, Suzano announced a price increase of $20 for the Asian market in February (a $20 price increase was already announced in January). On February 5, 2025, Arauco announced a price increase of $20 for radiata pine, bleached hardwood pulp, and unbleached pulp. The continuous price increase for pulp is a comprehensive effect of replenishment, costs, and supply.
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From the perspective of demand and inventory, according to UTIPILP and Europulp, in December 2024, European wood pulp inventory was 694,000 tons, up 3% month-on-month, with port inventory at 1.445 million tons, up 1% month-on-month, and European wood pulp consumption at 727,000 tons, up 1% month-on-month. In China, in December 2024, the import volume of hardwood pulp/softwood pulp was 1.697 million/738,000 tons, up 25%/12% month-on-month, as the price of hardwood pulp bottomed out in the fourth quarter, prompting manufacturers to actively stockpile. As of February 10, inventory at the ports of Qingdao, Changshu, and Ningbo has significantly increased month-on-month, reaching a recent high.
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From the supply perspective, Suzano announced a production reduction plan for the first quarter of 2025. Mercer International stated that softwood is limited by new capacity and forest resources, coupled with closures/reductions (e.g., Canfor Prince George, Paper Excellence Ashdown, Stora Enso), maintaining a good supply-demand fundamental. Under the record price gap between softwood and hardwood pulp, along with supply constraints caused by production cuts and maintenance stoppages, prices are expected to moderately increase in Q1 2025. 3) From the cost perspective, the cost of wood chips in Finland and Sweden has continuously risen unilaterally from 2021 to 2024, and the production costs of European softwood have continued to increase.
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Pulp price increases, terminal demand catalysis, and production stoppage events resonate, leading to frequent letters regarding paper products
On February 10-11, 2025, Sun Paper, APP, and Asia Pacific Resources announced price increases of 200 yuan for wood pulp-based paper products starting in March. On February 7, Nine Dragons Paper announced a price increase of 50 yuan for corrugated paper products at its Dongguan base starting February 17.
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<li>In terms of cultural paper, the price increase is driven on one hand by the cost of wood pulp, and on the other hand, March to May is the traditional peak season for cultural paper, with terminal demand improving as the autumn textbook and supplementary materials bidding begins. Additionally, from the supply side, the production disruptions at Chenming continue. As of January 23, 2025, normal production has resumed at Chenming's Huanggang base, while one cultural paper production line and one mechanical pulp production line at the Shouguang base have resumed production, with the restored production capacity accounting for 23.23%</li>
<li>In terms of boxboard and corrugated paper, on the supply side, paper mills are gradually resuming production after the holiday, leading to a slight weakening in supply. The shipments of orders placed before the holiday are mainly based on existing inventory, which has decreased significantly, and prices have shown slight fluctuations upward. On the demand side, there has not been a significant increase in procurement demand from paper packaging companies and the end market after the holiday. Paper mills are mainly focusing on shipping orders placed before the holiday, and the market maintains a demand for essential purchases.</li>
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Investment Recommendation:
Recommend comprehensive integrated leaders (002078.SZ), as well as players with advantages in segmented tracks such as Wuzhou Special Paper (605007.SH), Xianhe Co., Ltd. (603733.SH), Huawang Technology (605377.SH), Bohui Paper (600966.SH), and SHANYING INTERNATIONAL (600567.SH).
Risk Warning: Downstream demand may fall short of expectations, industry competition may intensify, and price increases may not materialize as expected

200488

000488

01812

603863

600567

000815

Guotai Junan released a research report indicating that the paper industry is entering a peak demand season, with rising pulp prices, catalyzed terminal demand, and production stoppage events collectively driving paper prices gradually upward. In 2024, leading domestic companies will accelerate the integration of forestry, pulp, and paper to enhance cost competitiveness and smooth out raw material price fluctuations. It is expected that with the consumption of low-priced wood pulp, the industry's profit elasticity can be anticipated

Zhitong

SCPH

CHENMING PAPER

Songyang

SHANYING INTERNATIONAL

MEILI CLOUD

ND PAPER

GTHT

SDBH

SUN PAPER

WUZHOU SPECIAL PAPER

Xianhe

Mercer

HUAWON

Guotai Junan: The paper industry experiences a resonance of demand and costs, with expected profit elasticity