The hottest paper industry is initially supported

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The paper industry is initially gaining pricing power, which proves that the industry is in the process of recovery

after the tentative price increase of coated paper, coated white paperboard (including white card) and double offset paper has received a certain degree of response from some downstream users in the middle and late may, the domestic mainstream manufacturers will work together to continue this process in June. The relevant price increase plan was sent to users at the end of last month, with a price increase range of 200 yuan/ton. The paper industry is initially gaining pricing power, which proves that the industry is in the process of recovery, and the main drivers of price increase include: 1) rising pulp prices; 2) The destocking of various paper types has been completed successively; 3) Downstream inventory replenishment demand; 4) Market demand rebounded slowly

the rise of pulp price is still sustainable

since China's wood pulp price bottomed out and rebounded in mid and late March, the pulp price in the European market has rebounded from the end of April, while the bottom signal has also appeared in North America. Major international pulp mills such as Domtar, northernpulp, canforpulp and westfraser plan to increase the pulp price in North America by $20/ton for the first time since the crisis

judging from the increase of pulp price and waste paper price, the price increase of 200 yuan/ton of paper products can roughly pass on the full cost. For example, the price of imported eucalyptus pulp has increased from 389 yuan/ton at the low point (the lowest transaction price is 355 yuan/ton) to 429 yuan at present. 3 The long-term wear resistance test/ton of lubricant increased by $40/ton, equivalent to 270 yuan/ton, accounting for 60-70% of the cost of 160-190 yuan/ton, while other costs such as energy prices also increased during the period. The prices of imported American waste ONP and OCC increased by US $36/ton and US $61/ton respectively, corresponding to the potential increase of paper price, which is also about 200 yuan/ton. The further price increase of paper depends on the further rise of pulp price and the improvement of its own supply-demand relationship

in April, the number of days of global commercial pulp inventory fell rapidly to only 35 days with the only decline in the history of 8 days, which is very close to the average level of 32-33 days. However, it reached a rare 50 day level twice in January this year and November last year. This rapid decline in global wood pulp inventory is mainly due to the heavy procurement of Chinese paper mills since this year. In addition to the import of 820000 tons in January, a year-on-year decrease of 13.7%, the import volume from February to April exceeded 1million tons, with a year-on-year increase of 25.3~61.6% in a single month. The cumulative import in the first April was 4.28 million tons, an increase of 26.3% over the previous year's 3.39 million tons

the rise in pulp prices was also driven by the rebound in global demand for paper products. For example, the demand for European paper, SC paper, coated and uncoated mechanical pulp paper all bottomed out in January this year. Synthetic resin lotion sand wall architectural coating jg/t 24 ⑵ 000 slowly rebounded from February to March. The total demand for four types of paper rose from 1.56 million tons in January to 1.82 million tons in March, which directly led to the decline in wood pulp inventory in European ports, which fell to 1.435 million tons in April, The month on month decrease was 13.9%, which was very similar to the declining trend of global wood pulp inventory. However, the consumption of paper products in the United States is still at the bottom, and its future recovery is expected to form a new increase in wood pulp demand, supporting pulp prices

although there is still a certain upward momentum in the recent term, some factors may restrict its further rise in the future, including: 1) Chinese procurement may be weakened due to the rise in plasma prices; 2) Risi statistics showed that in the fourth quarter of 2008, the global production capacity of commercial pulp was permanently and temporarily shut down by 2.19 million tons, and further shut down by 2.3 million tons in 1Q09. These production capacities are mainly distributed in North America, northern Europe and Asia. The scale of temporary shutdown of high-cost non commercial pulp is larger, and the rise of pulp price will trigger the resumption of production of commercial or non commercial pulp; 3) New production capacity is still being invested in low-cost pulping areas in South America, typically 1.3 million tons of VCP capacity in Brazil was put into operation at the end of March

the situation caused by the check and balance of the above factors may be that the pulp price fluctuates in a lower price range, so the driving effect of pulp price on paper price may be weakened in the medium or long term, although it will still be strong at present

the rise of pulp price improves the profitability of the paper mill

even if the demand does not rebound significantly, the paper price, driven by the pulp price, may still improve the profitability of the paper mill periodically, because the downstream is worried that the rise of paper price will speed up the replenishment of inventory

in the process of de stocking the paper industry chain in the second half of last year, the inventory of end users and dealers fell rapidly with the rapid decline of paper prices. Since the end of last year, the inventory of mainstream dealers has been basically at the level of 0.5 ~ 1 month, which is significantly lower than the normal volume of 1.5 ~ 2 months, and even lower than the inventory volume of 21million tons ~ 3 months or even higher during the period of paper price rise. As the current paper price is at the bottom of history, we understand that mainstream dealers have a certain willingness to purchase. The situation of paper dominated by direct selling is similar. At present, the inventory of newspaper offices is also lower than the historical average level

the inventory replenishment in the downstream for half a month to one month will bring about a phased push up of the paper price. Just as the replenishment of wood pulp and waste paper inventory in the paper mill brings about the current rise in raw material prices, the rise in paper prices may periodically exceed the increase caused by the rise in costs, making the paper mill profitable

supply decline and export improvement supply and demand

regardless of the possible stage profit increase of downstream inventory replenishment, the improvement of paper mill profit will ultimately depend on the improvement of supply and demand relationship. Historically, the demand of the paper industry has always been highly related to economic growth. It is not easy to observe whether the economy is growing at present. It is also difficult to observe the actual obvious Pulling Factors of the demand of the paper industry, but the slow rise of pulp prices has verified that this demand does exist. At the same time, the rapid increase in output from March to April did not bring new inventory pressure to mainstream manufacturers, indicating that apparent consumption growth was relatively obvious

for the whole paper industry, if domestic demand is not expected for the time being, the decline in supply and export may be two important aspects of the improvement in supply and demand of the industry. The decline in supply is due to the elimination of backward production capacity and the relatively slow increase. In the first four months of this year, the industry's fixed asset investment increased by 11.5%, which is still at the historical bottom level, indicating that the supply is limited at present and in the future for more than a year

paper types with relatively favorable supply-demand relationship

in the next six months to one year, we can judge that the supply-demand relationship of paper, coated paper and cultural paper is relatively easy to improve among all kinds of paper types


there was no new supply during the year. The last paper machine put into production before was Guangzhou Paper Nansha 400000 ton production line. There was no new capacity in 2008, so the pressure was small; There is still no new production line put into operation this year. The Fujian Nanping Paper production line, which is scheduled to be put into operation at the end of the year, plans to produce high-grade cultural paper; The earliest production line to be put into operation in the future will be the second-hand equipment of Guangdong Jiangmen Yinzhou lake base of Huatai Co., Ltd

the existing capacity is changed to production or shut down. Hanyang Chenming 150000 tons of paper has been converted to cultural paper in the first quarter of 2009; The two production lines of the old Guangzhou paper mill were converted to double offset paper in October last year, and it is planned to complete the production conversion target of 250000 tons by the end of this year; Hebei Fanya Longteng, a foreign-funded enterprise, has reduced noise, vibration and harshness (NVH) and friction consumption due to high costs, and its 330000 ton production capacity has been shut down on a large scale

de stocking has come to an end, and this factor restricting current profits is expected to be lifted at the end of this quarter or the beginning of next quarter. The advertising revenue of downstream newspapers is increasing with the recovery of the real estate and automobile industries

coated paper

there was no new supply during the year. Due to the project interruption at the end of last year, the production capacity of APP Jinhai Pulp, which was originally planned to be put into operation this summer, may be postponed to the first half of next year; Exports have soared this year. A total of 370000 tons were exported this year (including 80000 tons, 80000 tons, 100000 tons and 110000 tons from January to April respectively). If this trend continues, it will exceed the export volume of 930000 tons and 970000 tons in the past two years. The export expansion is not the growth of foreign demand, but the competitive advantage of domestic manufacturers under low pulp prices, competing for some market shares in South Korea and Japan

cultural paper

the elimination of backward production capacity leads to a reduction in supply. The improvement of environmental protection standards is producing results, and its role will continue. The national development and Reform Commission requires that another 2million tons of backward production capacity be eliminated by 2011; Demand is stable

investment suggestions

based on the above judgment of the supply and demand relationship of paper, we suggest to focus on Huatai Co., Ltd. and sun paper, and adjust the investment rating of sun paper from cautious recommendation to recommendation based on the following reasons: 1) the supply and demand relationship of coated paper industry is improving; 2) The company plans that the joint venture Wanguo and Sun International will produce and sell 750000 to 800000 tons of white cards this year, including nearly 400000 tons of high-end products (including nearly 250000 tons of cigarette cards, 50000 to 60000 tons of liquid packs, and 100000 tons of food grade white cards), and the rest are social cards and copper plates. The high-grade white card has increased significantly compared with the previous year; 3) Since the first quarter of 2009, large-scale purchase of low-cost imported wood pulp, with an inventory of no less than 5 months; 4) Strong product sales and high equipment operating rate

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