Recently, Chinese commodity prices have continued to rise. Among them, pulp futures prices are like a wild horse off the reins to start soaring mode, and continue to set new record highs. The pulp market offer rose sharply, causing downstream paper mills to continuously raise prices for tissue paper, toilet paper and other household paper.
A man uses an automatic toilet paper dispenser with face recognition technology in a public toilet at the Temple of Heaven in Beijing, March 21, 2017.
According to the Guangzhou Daily, the recent rise in the price of paper has once again sparked heated debate, with some consumers reflecting that household paper in their area has seen “three consecutive increases” in a month, and others saying they are holding on to toilet paper.
Not only toilet paper, in fact, since May, China’s major cultural paper companies and traders issued a number of price increase letter, which cultural paper prices generally increased by 200 yuan / ton, white cardboard price increases reached 1,000 yuan / ton.
As of May 24, China’s leading packaging paper company, Nine Dragons Paper, has raised prices five times. Driven by Nine Dragons, more than 40 paper companies in Hebei, Henan and Shandong adjusted their prices.
Household paper companies have previously announced price increases. Hengan International announced that the price of its tissue products will gradually increase by 10% to 20% from April 1. Zhongshun Jielou, Jinhongye Paper and Vinda International also announced that they will adjust their household paper products from April 1.
China Federation of Industry and Commerce Paper Chamber of Commerce Secretary-General Zhang Shenjin said in this regard, the main reason for this round of paper price increases is the paper upstream pulp, logistics, energy and other price increases, directly increasing the production costs of enterprises.
March 31 Shandong Sun Group announced that in April on industrial paper and copper plate paper machine optimization adjustment; April 26 Shandong Huatai Paper issued a notice, plans to the first half of May on the copper plate paper machine shutdown maintenance; April 27 Chenming Paper decided in the first half of May on the cultural paper machine shutdown maintenance 10 days.
Some industry insiders said that some small paper enterprises are currently in a difficult position, due to the pulp price and paper price inversion, it does not rule out the possibility of direct shutdown; and some large, raw material supply guarantee paper enterprises, may consider a more compromise approach, such as “shutdown overhaul”.
“Waste ban”, “plastic ban” is the main driver of pulp prices soaring
Since May, the Communist Party of China State Council executive meeting three times in a row to mention the issue of commodity prices and rising prices of raw materials. The last two times, it is proposed to combat hoarding, monopoly and other acts.
From the beginning of November last year, pulp futures prices began to soar like a wild horse and continued to set new record highs.
According to Seven Harvest, the main pulp futures contract 2103 rose from a low of 4,620 yuan (RMB, same below) per ton on Nov. 2 last year to a high of 6,778 yuan per ton on Feb. 1 this year, up more than 2,100 yuan per ton in less than three months, or 46.7 percent.
What is the driving force behind this most bullish futures variety spanning 2020 and 2021?
On November 25 last year, the Communist Party of China’s Ministry of Ecology and Environment and five other departments issued an announcement banning the import of solid waste by any means from January 1, 2021. As China’s waste separation policy is advancing more slowly and the waste paper recycling rate is still relatively low, China’s waste paper supply is temporarily unable to meet the shortage of foreign waste, and the supply is tight, supporting the rise of national waste prices.
In early 2020, the Development and Reform Commission of the Communist Party of China and the Ministry of Ecology and Environment issued a “plastic ban”. In January this year, the official landing, the country’s supermarkets, takeaways and other plastic use “big” have begun to launch plastic reduction initiatives and transitional measures.
Due to the implementation of the “plastic ban” and “waste ban”, from mid-December 2020, the downstream paper mills raised prices continuously, according to statistics, the number of price increases for six rounds, iterative plus the increase in freight rates, the Chinese pulp market offer rose sharply. In addition, global freight prices surged, foreign mill capacity declined, the RMB appreciated, overseas pulp mills kept raising prices, expectations for a boost in demand for paper products surged, and so on, all of which may have played a role together.
Currently, China produces mainly waste pulp, and the lack of pulp production capacity is a direct result of severe import dependence. According to data, China’s import dependence on wood pulp is 65%.
The United States is the largest producer of pulp in the world, with 48.351 million tons, accounting for 26.03% of total global pulp production. The other countries in the top five are Brazil, Canada, China and Sweden.