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Present Situation of the Paper Industry: Paper Companies Decline in the Number While Price of Paper

The decline in the number of paper companies, the polarization of the industry and the shock rise of paper prices will be a phenomenon for a long time.

Overcapacity cutting is pushed forward and the number of paper companies has declined sharply.

According to the statistics released by the National Bureau of Statistics, the number of enterprises in paper-making and paper products was 6616 by March 2017, 216 less than the last year. It is only the number which above the size of the paper mills reduction (enterprises above designated size standards for the main business income is 20 million Yuan), small paper mills survival situation is less optimistic.

According to incomplete statistics, 18 paper factories in Hunan and one corrugated paper machine have been shut down in recent environmental inspections. Three factories in Fujian province were suspended from production and one was given administrative punishment. Two paper factories in Anhui province were ordered to suspend production.

The production costs of paper companies are higher, and the industry continues to differentiate.

The high demands of environmental protection, and the investment in the environmental protection of paper companies, directly raise the cost of production. It is reported, 13 papermaking enterprises in Liuyang Dayao paper base, raised 16 million to build wastewater pretreatment center, after initial treatment, wastewater was poured again into the sewage treatment plant, achieve which ultimately achieves national standards.

The cost of an environmental upgrade may not be affordable for all paper companies, and companies which fail to meet the standards will face a bleak future.

The stronger the strong, the weaker the weak, will last for a while. From the semi-annual performance forecast of some of the leading paper companies, they have maintained high growth. The Sun Paper Industry expects a net profit of 770m to 880m in June, up 120-150% from a year earlier. The company expects net profit will rise significantly from January to June compared to last year.

Stop control inventory, the paper price concussion up.

In a monopoly or an oligarchy market, companies can control prices by controlling the supply side. This approach is also, to a certain extent, effective in the increasing concentration of the paper industry. Paper companies control inventory by limiting production, which in turn controls the decline of paper prices in the off-season and even increases the price of paper.

Since May, 31 companies have raised their prices by 50 to 300 Yuan per ton. Culture paper gains is not weak, wrapping paper stabilizing picks up, waste paper prices rising quickly. From May 9th to 10th , 35 paper mills have raised the price of paper, up to a maximum of 350 Yuan/ton.

The rise of the paper price in May has been set ablaze. In the light of the paper industry, the price of paper is going up, but how much can be done is still in doubt, and the risk of the paper price shock is still lingering.