Cathay Pacific Haitong: Pulp and paper prices continued to weaken in June, off-season demand was clearly pressured

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that pulp and paper prices fell steadily in June. It is expected that pulp prices will remain low, and paper prices will operate weakly during the off-season. Prices of wood pulp and paper products continued to decline in June, and the three major categories of cultural paper, white cardboard, and box tile paper all showed weak operating characteristics during the off-season. Among them, the average price of double adhesive paper fell 0.9% month-on-month to 5,153 yuan/ton, white cardboard rose slightly by 0.29% and then fell, and box board paper fell 0.31% month-on-month. Slurry prices are suppressed by a pattern of strong supply and weak demand. On the demand side, the price of raw paper continues to be weak; from the supply side, the overall market shows a pattern of loose supply.

Cathay Pacific Haitong's main views are as follows:

Cultural paper: The decline in paper prices and costs is stabilizing, and supply and demand are expected to improve marginally

As of June 27, the average market price of 70g wood pulp high white double adhesive paper in June was 5,153 yuan/ton, down 47 yuan/ton from month to month, or 0.90%, down 573 yuan/ton year on year, or 10.01%. First, most paper mill reports stabilized at the beginning of the month, and there was little change in the order acceptance situation; second, dealers were careful to pick up goods and gave priority to shipping, and some traders had high inventory pressure and price reduction promotion orders; third, publishing orders were not collected centrally, and social orders were still in the low season, and the market just needed to be processed; fourth, the average price of upstream raw wood pulp fell, and cost support weakened in the face of double adhesive paper.

White cardboard: off-season paper prices rise and then fall, cost-driven profit improvement

As of June 27, the average monthly transaction price of 250-400g flat sheet white cardboard market including tax was 4,088 yuan/ton, an increase of 0.29% over May and a decrease of 6.17% over the same period in '24. First, there is little pressure on mainstream paper mills to increase market prices to improve industry profits. At the beginning of the month, traders experimented and rose at low prices of 100 yuan/ton; second, as traditional demand deepened in the off-season, paper prices lacked continuous upward support, and the pressure on traders to ship increased in the middle and late stages, and paper prices gradually changed from steady to decline; third, raw wood pulp prices fluctuated and declined, and the market price appreciation mentality gradually loosened.

Box tile paper: demand is weak in the off-season, paper prices & profits continue to decline

As of June 27, the average monthly price of box board paper in China was 3503 yuan/ton, down 11 yuan/ton from May's average price of 3,514 yuan/ton, down 0.31% month-on-month and 3.68% year-on-year. First, the price increase in large-scale paper mills at the beginning of the month failed to be implemented as scheduled, and the price insurance policy continued to be implemented, and market pessimism gradually heated up. Beginning in the middle of the month, large-scale paper mills lowered their factory prices several times, small and medium paper mills followed, and the focus of market transactions declined, paper mill orders were limited, and inventory levels increased; secondly, June was the traditional low season in the market, terminal consumption was weak, downstream packaging factories did not take orders, and enthusiasm for raw paper procurement decreased. Mainly, the gap between supply and demand in the market widened; finally, the price of upstream waste paper rose and then fell, and the average price rose month-on-month, and industry profits were under pressure as costs rose.

Wood pulp: External prices are declining, and the pattern of strong supply and demand is weak, and it is difficult to improve

Chile's Arauco announced a new round of wood pulp external price quotes: acerola pulp silver star 720 US dollars/ton (requires purchase in June-7 months); natural color paste, gold star 620 US dollars/ton; broadleaf pulp star has no offer yet. The remaining pulp mills have yet to clearly announce the July external market prices.

First, on the demand side, the price of raw paper continues to be weak, compounded by insufficient profit repair in the paper industry and increasing pressure to remove inventory, paper mills generally adopt a pressurized procurement strategy to optimize raw material procurement costs and continue to drag down pulp prices.

Second, the prices of the main pulp futures contracts on the Shanghai Futures Exchange fluctuated and declined, which suppressed the confidence of market participants to a certain extent. Under the transmission effect of the base difference quotation mechanism, the spot market price of imported slurry fell, and the weak performance of the futures market had an obvious driving effect on the spot market.

Third, from the supply-side perspective, the overall market shows a pattern of loose supply. The arrival volume of imported pulp remains stable, and at the same time, the supply of domestic pulp continues to be abundant, effectively suppressing the spot market price of imported pulp, making it difficult for the spot price of imported pulp to rebound continuously.

Risk warning: Overseas wood pulp supply chain disturbances, downstream consumer demand falling short of expectations, etc.