568 price increase letters, a skyrocketing 800 yuan/ton; large mills rely on the relative cost advantage of foreign waste quotas to cut prices to force small and medium-sized paper mills to squeeze the profit margins of small and medium-sized paper mills to clear small mills. This is the reality of the paper market in 2018 Condition! In this context, the paper price in the first quarter of 2019 will rise by another 200 yuan/ton, or it may still run at a high level!

　　2018 in the paper market: lack of raw materials, turbulent prices, and industry insiders at a loss
　　
　　Since the second half of 2017, China's papermaking market has undergone a series of changes, and the new environment brought about by the changes will continue to affect the paper market in 2018.
　　
　　 "Restricted imports of solid waste", "much higher than the international standard of 0.5% of waste paper inclusions", "increasingly strict environmental supervision", "China-US trade war" and other factors continue to ferment in the Chinese paper market.
　　
The results presented to us are "irregularly findable national waste prices", "packaging paper market with sluggish shipments during peak seasons", "paper companies that frequently shut down and reduce production during traditional peak seasons", "high wood pulp prices", " Downstream wood pulp markets that have repeatedly failed to raise prices" and "domestic large-scale enterprises that are rapidly carrying out overseas acquisitions and capacity transfers" and so on.
　　
　　 These factors can be said to reveal the real situation of the paper market in 2018: lack of raw materials, price turbulence, and industry insiders at a loss.
　　
　　 Against this background, let's review the changes and look forward to the next trend in 2019!

　　568 price increase letters, a surge of 800 yuan/ton at one time, and another 200 yuan/ton in the first quarter of 2019
　　
　　Market performance one:
　　
　　 2018 paper mills have fewer price increase letters, and there are more frequent shutdowns and price reductions. After the holiday in 2019, it may be a key window
　　
　　 Price increase letter:
　　
　　According to incomplete statistics, in 2018, the paper mill issued 176 price increase letters for cultural paper base paper, and 392 paper price increase letters for packaging paper base paper, for a total of 568, which is nearly three times less than the 1,636 price increase letters in 2017.
　　
　　 In January 2018, the market was lightly traded, and shipments were relatively slow. Paper mills and distributors reduced inventories to withdraw funds. Nine Dragons, Shanda and other paper mills began to tentatively reduce prices ranging from 50 yuan to 400 yuan/ton.
　　
　　 After ending the mixed situation of base paper in the first quarter, the price of corrugated base paper began to show a continuous upward trend in late April. By mid-to-late May, the price reached the highest point in the whole year, with a reference average price of 4837.5 yuan/ton.
　　
　　 From the figure below, it can be seen that March, April, and May ushered in the peak period of price increase letter for the whole year.
　　
　　 Affected by the trade war and order demand, the price of base paper continued to fall in the second half of 2018 until the price of corrugated base paper reached the lowest point of the year at the end of November, with a reference average price of 3350 yuan/ton.
　　
A total of 61 price increase letters were issued in August and September 2018. Compared with the 447 and 576 price increase letters in August and September 2017, it can be seen how much the impact of multiple factors has on the market, leading to the low peak season and the market The coldness of the order.

　　Taking the average price of corrugated paper in the fourth quarter (3848 yuan/ton) as an example, the market showed a trend of first decline and then rise. Due to the weak performance of the raw material waste paper market and insufficient cost support, the overall price continued to decline.
　　
It is expected that the price of base paper will continue to increase after the holiday. Especially in the first half of the month, due to the resumption of downstream operations, the level of base paper inventory is not high, and there is a slight willingness to replenish the position in the short term. At the same time, considering that new capacity is about to be launched, the market demand for raw materials will increase sharply. This will also boost the price of national waste yellow paperboard.
　　
　　 Paper prices will rise to a certain extent under the pressure of paper mills' costs. Under the condition of stricter foreign waste policies, it will also support the rise of paper prices. However, the introduction of new capacity has also exacerbated the contradiction between market supply and demand. Therefore, the overall increase in paper prices in the first quarter is expected to be 100-200 yuan/ton, focusing on the shutdown arrangements of paper companies and the price adjustment policies of large paper mills during the Spring Festival.
　　
　　In March, April, and May, it is expected that the base paper will have a periodical rise, or a key window period in 2019.
　　
　　 Shutdown:
　　
　　 Some people say that 2018 is the year of downtime for paper mills. Since late January, some paper mills have been forced to shut down. From mid-May, the paper mills have scheduled downtime for maintenance every month.
　　
　　The suspension of production by paper companies is more interpreted by the market as suspension of production and price protection.
　　
　　 Looking back from the price trend of base paper in 2018, it seems to have confirmed this view.
　　
　　 The downtime for maintenance of mainstream paper mills in Guangdong and Henan in June did play a role in insuring prices, but the good times did not last long. Paper prices began to plummet in early July. After a slight increase at the end of the year, they finally reached the price level at the beginning of the year.
　　
　　 From this year's Nine Dragons, Liwen, Jianhui and other giant companies voluntarily suspend production, it seems that it is caused by the lack of national abolition, but the essence is the weakening of the right to speak.
　　
　　 In many cases, it can only be sold at reduced prices and stopped production and restricted production, changing from being active to passive.
　　
At the same time, large mills are also using the relative cost advantages of foreign waste quotas to achieve the goal of forcing small and medium-sized paper mills to squeeze the profit margins of small and medium-sized paper mills. This will not only increase market concentration, but also effectively eliminate the national Waste demand, to make room for overseas waste procurement for the new production capacity of large factories.
　　
　　2018 paper industry net profit declines, performance is declining, development is facing difficulties, and overseas expansion is accelerated
　　
　　 Market performance 2:
　　
　　 The net profit of the paper industry in 2018 declined year-on-year, while accelerating overseas deployment
　　
　　 At present, there are mainly 22 listed companies in the domestic paper industry, including Nine Dragons Paper and Lee & Man Paper, which are listed on the Hong Kong Stock Exchange. Judging from the performance of companies in the paper industry in the first three quarters of 2018, there has been a significant decline compared to the same period in 2017.
　　
In terms of revenue, Mingfeng Special Paper and Guangdong Ganhua Group experienced year-on-year declines; net profit performance was even worse. Eight companies experienced year-on-year declines in net profit, accounting for more than one-third of the total. It includes companies with large revenues such as Chenming Paper and Bohui Paper.
　　
　　 Therefore, overall, in the first three quarters of 2018, the performance of my country's paper-making enterprises was declining, and the development was facing certain difficulties. This was mainly due to the tightening of raw material supply and sluggish downstream demand.
　　
　　 In order to alleviate this situation, paper companies have extended their upstream and downstream to the direction of industrial chain integration, in order to achieve control of raw materials from the source, reduce costs, and develop packaging business to ease the impact of market fluctuations on demand.
　　
　　 At the same time, in view of the serious dependence of overseas raw materials in the domestic paper industry, which has caused raw materials to be restricted in overseas markets, many companies have begun to deploy overseas production capacity to gain more room for development.
　　
　　Paper prices will gradually be determined by the cost of raw materials such as national waste and wood pulp, and may still run at a high level in 2019
　　
　　 Market performance three:
　　
　　 In 2018, the import volume of waste paper decreased significantly. The price of raw materials is expected to continue to strengthen in 2019, and the price of raw paper will gradually be determined by the cost of national waste.
　　
According to the data obtained from the General Administration of Customs of China, in 2018, the Ministry of Environmental Protection announced a total of 26 batches of imported waste paper lists. A total of 17.055 million tons of various types of waste paper were imported, which was lower than the 25.72 million tons in 2017, a year-on-year decrease of about 33.8%. The rate of decline is the highest in recent years. Compared with 2012, the volume of domestic waste paper imports has fallen by nearly half.
　　
　　With the advancement of supply-side reforms, stricter environmental protection policies, strict restrictions on external waste quotas, and multiple factors superimposed, external waste imports will show a slight contraction in 2019, consistent with the national zero solid waste import guidelines.
　　
　　 Judging from the current situation, the tight supply and demand of waste paper is an important factor supporting the relatively high price of waste paper.
　　
The global pulp exporting countries are relatively concentrated, and the demand is relatively stable. In addition, the source of recycled pulp resources is likely to become scarce in the next 5 years, and South American suppliers will also have difficulties in the extraction of virgin forests. The scarce resource attributes of wood pulp are trending. Enhancement, the trend of upward movement of the overall price center of industrial chain products will continue.
　　
　　 From the perspective of the global wood pulp market in 2019, it is estimated that the final net new capacity will be about 1.2 million tons. On the demand side, the sluggish downstream demand for cultural paper in the Chinese market in 2018 is difficult to improve. The global tight balance of supply and demand has been broken, but the industry is relatively concentrated, with CR4 accounting for 48%. The upstream bargaining power is relatively strong, and the external price is relatively strong. There is not much space, but with the cyclical increase in demand, it is expected that the market price of cultural paper will increase to a certain extent.
　　
　　 In summary, the price of base paper will gradually be determined by the cost of raw materials such as national waste and wood pulp. The domestic waste paper recycling rate will gradually increase, and the degree of dependence on external waste will gradually decrease. The domestic wood pulp self-sufficiency rate is low, and the pulp price will continue to follow the global pulp price trend, which will be the main factor affecting the cost side in 2019.
　　
　　 According to incomplete statistics, the packaging paper industry will put nearly 5 million tons of production capacity in the first half of 2019. On the supply side, there will be greater pressure for new capacity in 2019. On the demand side, pressure still exists.
　　
　　 Affected by factors such as reduction in export orders and shrinking domestic demand, paper prices are unlikely to rise or fall sharply. However, because the waste paper policy is still strict, the supply of raw waste paper is in a tight situation. Under cost pressure, the price of paper may still run at a high level, but the overall paper price may stabilize.
　　
　　 The price of raw materials in 2019 is relatively high, but the price of paper cannot rise, which is a test for paper companies.
　　
　　In the first round of price increases in January just past, it included high-wattage, white card, copper card, gray board, white board, yarn tube paper and other paper types.
　　
　　 Several large paper mills have issued shutdown letters one after another, and small paper mills have also followed up.
　　
　　According to past experience, the next move after the paper mill shuts down is a series of combo punches.
　　
　　In the eyes of those in the circle, the lack of market demand has led to a reduction in the operating rate of paper mills, and paper mills take the initiative to shut down, which has a positive effect on the recovery of paper prices.
　　
　　 In 2019, more new production capacity will be put into the market, intensifying competition and reshuffle. At the stage when the demand for paper products is not clearly released, environmental supervision has brought restructuring opportunities for the paper industry, and cost pressure has put small enterprises at a competitive disadvantage. The Matthew effect in the paper market in 2019 may continue to appear.
　　
　　 Market participants at all levels in the industry chain are also adjusting new ideas and directions to deal with the Chinese paper market under the new normal. The pain of change is constantly playing out in the industry.
　　
　　 So for domestic participants at all levels, how to seize the opportunities in the period of change, how to deal with the challenges of the period of change, and how to make the most of the cloud to see the day, it is particularly important.