Corrugated paper: the first quarter market volatility down the second quarter is difficult to say optimistic.

2024-04-15

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Corrugated paper: the first quarter market volatility down the second quarter is difficult to say optimistic.

In the first quarter, the overall supply of corrugated paper market was loose, the demand side was insufficient, the imbalance between supply and demand was highlighted, and the paper price shock was running lower. According to data monitoring, the average price of China's AA grade 120g corrugated paper market in the first quarter was 2855 yuan/ton, down 2.45 from the fourth quarter of last year and 8.68 from the same period last year. Among them, the price high appeared at 2925 yuan/ton at the beginning of the year, and the low appeared at 2740 yuan/ton at the end of March, with a volatility of 6.32. Price fluctuations are mainly affected by changes in the supply and demand side, showing the characteristics of phased adjustment.

The supply end of the corrugated paper market is loose. In the first quarter, affected by the Spring Festival holiday, since late January, some paper mills have been shut down for holidays. Most paper mills have been shut down in early February, and the start-up load rate has declined. According to statistics, the average weekly operating load of corrugated paper industry in the first quarter was 51.54, down 2.15 percentage points from the fourth quarter of last year. However, due to the increase in new production capacity, the output increased by 11.04 from the fourth quarter of last year. The cumulative import volume of corrugated paper in January-February was 522500 tons, up 5.10 from the same period of last year. As of the end of the first quarter, the sample inventory of corrugated paper was 760400 tons, up 28.53, the average monthly supply of corrugated paper in the first quarter was about 3.7 million tons, up 1.65 from the previous quarter, so the supply of corrugated paper market in the first quarter was relatively loose.

Downstream packaging plant replenishment will be low. Entering 2024, the market demand side of the volume is insufficient, the industry more to maintain just need to purchase, corrugated paper market most of the time according to the demand side of the logic of price adjustment. Judging from the domestic total demand data, the average monthly demand in the first quarter is expected to be about 1.99 million tons, down 11.56 from the previous quarter. This is mainly due to the fact that since late January, downstream packaging plants have been shut down for holidays one after another, thus reducing the consumption of corrugated paper. The Spring Festival holiday effect support weakened, affected by the lack of terminal order volume, the industry's willingness to prepare for the Spring Festival is low, most of the industry to corrugated paper procurement to maintain just need procurement strategy.

Comprehensive supply and demand data comparison, the supply side of the corrugated paper market in the first quarter is more relaxed, and the demand side of the obvious reduction in the background, the pattern of oversupply gradually strengthened, resulting in the paper price shock downward operation.

Second Quarter Market Outlook

From the demand level, the second quarter of the market is still in the traditional consumption off-season, although the May Day around by the holiday consumption, the consumption of corrugated paper increased, and in other periods of demand is expected to be limited, the market supply exceeds demand pattern or difficult to change. In the corrugated paper market in the past ten years of price operation, the second quarter of the probability of decline reached 50%-80%, downstream packaging plants on the late demand release degree of doubt, so the corrugated paper procurement volume is still maintained just demand-oriented, inventory pressure is also difficult to transfer to the downstream.

At the supply level, supply is expected to decline slightly in the second quarter. At present, the price of upstream paper mills continues to fall, while the price of waste paper, the main raw material, increases the profit pressure of paper mills, some small and medium-sized paper mills or storage downtime may be. At present, some paper mills have issued downtime plans around May 1, with downtime of 9-10 days, and corrugated paper production may be reduced. However, at present, the inventory of paper mills is at a high level, and the superimposed import volume is still increasing. It is estimated that the total supply in the second quarter will increase by 5.14 compared with the previous quarter.

At the cost level, the cost end of the second quarter is expected to be low. As the market is in the off-season, the demand for raw materials by paper mills has declined, while the recovery of waste yellow board paper, the main raw material, has increased, and the supply side is still loose, which is not conducive to price operation. However, the price of waste paper is at the low level in the past 7 years, and the space for continued decline is limited, and the cost side or low level fluctuates slightly. Affected by the mutual conduction effect of upstream and downstream products, the cost is not supported by the paper price.

Combined with the above factors, the corrugated paper market will still face downward pressure in the second quarter, but the decline narrowed. The corrugated paper market is mostly adjusted in stages according to the logic of demand surface changes. It is estimated that the average price of domestic AA grade 120g corrugated paper market in the second quarter will range from 2680 to 2750 yuan/ton.