CICC: The supply and demand pattern for pulp and paper is still relatively loose, and box board corrugated paper may be restored

The Zhitong Finance App learned that CICC released a research report saying that looking ahead to 2026, consumer demand is still in a moderate recovery stage, with various changes in the supply and demand of paper types: the supply and demand for pulp and paper types is still relaxed, and pulp and paper integration leaders are expected to continue to receive excessive profits; the production capacity of box board corrugated paper has basically come to an end, and it is expected that it will take the lead in recovering the current supply and demand imbalance cycle, leading to a recovery in production capacity utilization and a year-on-year increase in the price of tons of paper.

CICC's main views are as follows:

The supply and demand pattern for pulp and paper is still relatively relaxed

The bank believes that overall demand for papermaking in 2026 is still recovering moderately. Although supply has entered the final stage, additional production capacity will be released in 2025, judging that supply and demand are relatively relaxed. Judging from the marginal additional pressure, the bank judges cultural paper > specialty paper > white card paper. On the raw material side, in recent years, under the intense game in the pulp and paper industry chain, the pulp price cycle has become shorter, and it also plays the role of a “signal gun” for investment decisions. According to the bank's statistics, the next large-scale commercial pulp project or 2027 will be put into operation. The bank expects a year-on-year restoration of pulp prices in 2026, but in recent years, the concentration of additional production capacity for homemade pulp has hindered the upper limit of pulp price restoration. Judging that broadleaf pulp prices fluctuate in the range of 550-650 US dollars/ton.

The box board corrugated paper price center is expected to recover year-on-year

The bank believes that box board corrugated paper is the most sensitive to consumption in papermaking. The consumption growth rate in 2023-24 is 8% and 4%, and the bank expects consumption growth to be ~10 million tons in 2023-25; the current round of supply expansion has entered the final stage. The bank estimates that it has put into operation a total of 15 million tons+ in 2023-25 (the four leading companies account for ~ 40%). The expansion of the original leading companies will be relatively restrained in the future: Nine Dragons will stop expanding production of boxboard corrugated paper in 2024, and Shanying Anhui will be more difficult to start production in the short term. There are no expansion plans yet, and in 2026 it is currently only Sun70 10,000 tons of production capacity is scheduled to be released at the end of the year. The bank believes that this round of industry expansion has come to an end. The bank is optimistic that 2026 will usher in a year-on-year restoration of the capacity utilization rate and price center.

The scarcity of high-quality woodland and pulp assets has further increased

Considering global economic growth, limited resources of high-quality woodland, and tightening of upstream forest and pulp resources, the bank is optimistic about enterprises with high-quality forest pulp assets. Specifically, in the short term, Nine Dragons and Fairy Crane actively laid out the homemade pulp process, and the new base brought in increased profits; in the long run, the domestic Sun led the industry in establishing an integrated forest pulp and paper industrial chain. The bank is optimistic that its excess profits will continue to accumulate, and the scarce value of Lao woodland is in sight. Overseas Suzano will also benefit from the layout of high-quality forest pulp assets.

risk

Demand fell short of expectations; new supply exceeded expectations; prices of core raw materials fluctuated beyond expectations.