【Wdoodoo Weekly Paper Industry Report】

This week, the pressure on pulp has weakened. The average price of needle pulp is around 4833 yuan/ton, a decrease of 94 yuan/ton compared to the previous period; The average price of broad-leaved pulp is 4336 yuan/ton, a decrease of 30 yuan/ton compared to the previous period. Despite frequent disturbances in pulp supply in recent times, paper mills lack confidence and focus on digesting finished paper inventory, resulting in low-level fluctuations in pulp.

1. Macro support has weakened to some extent.

Affected by the weakening of GDP and CPI on a month on month basis, the Federal Reserve has kept interest rates unchanged. However, the US and Iran are pushing for talks, and the geopolitical risk premium has kept global inflation expectations high. The report shows that expectations of a rate hike in September are still high, suppressing commodity valuations.

At the weekend, the United States again TACO, maintaining the judgment that interest rate reduction is the main theme of the United States, and paying attention to the disturbance of the changes in the interest rate of the long-term treasury bond bonds of the United States to the Middle East policy.

The policy focus of the Politburo meeting is more inclined to deal with downward pressure, and implementing and making good use of existing policies is still a priority option. If the downward pressure on the fundamentals increases in the third and fourth quarters, incremental policies may provide support and protection.

2. There are many reports of needle production stoppage and price increase, but the pressure of destocking is still high.

As losses intensify, some coniferous brands are facing tight cash flow, leading to increased production cuts in pulp mills to alleviate excess pressure. Lion brand and Beimu will permanently shut down, and some brands will switch to production. The market speculates that more production cuts will occur. As a result, needle brands such as Silver Star have increased their prices by 10-20 US dollars per ton this round, reducing the supply of low-priced needles and shifting the center of gravity of fabric needles.

However, there is still a high pressure for needle pulp factories to reduce inventory, which will not reduce transportation to China. The short-term market supply pressure remains unchanged, and the reduction in supply is actually more favorable for the long term.

The broad-leaved pulp is facing the impact of new production capacity and low prices of domestic forest pulp paper integration, and the price continues to be under pressure. Foreign brands such as celebrities have generally fallen by 10-20 US dollars per ton in this round.

3. Frequent price increase letters from paper mills, with actual finished paper mainly being shipped out

The off-season atmosphere of the industrial chain is still present. Insufficient follow-up on finished paper orders, active destocking by raw paper companies, reduced prices by traders, limited improvement in gross profit for paper mills, and a lack of willingness to purchase raw materials at low prices for essential needs, resulting in a lack of centralized replenishment. As the peak season approaches, paper mills are gradually raising prices, but the implementation of price increases still needs to be observed.

From a category perspective: White cardboard shipments are slowing down, and large-scale paper mills have increased their prices by 100 yuan/ton at the beginning of the month. However, terminal demand is limited, and traders are holding back prices and observing; Double adhesive paper enterprises have increased their production and inventory pressure has eased. Large scale paper enterprises are considering price increases, but distributors are generally selling their products and are mainly observing the situation; The supply and demand of household paper are weak, and downstream processing plants are cautious in their procurement.

4. Pay attention to the progress of finished paper and pulp inventory.

At present, the inventory of finished paper and pulp in China is still relatively high. Last week, pulp ports and warehouse receipts once again accumulated inventory, which suppressed market confidence.

Effective destocking of finished paper products in the future is necessary to drive the replenishment of raw materials, and thus to see the port destocking. Otherwise, it is difficult to see sustained upward momentum.

Overall, there has been an increase in news of supply disruptions from overseas pulp mills, and domestic paper and pulp mills have also followed suit with price increases, stabilizing low-priced pulp prices. However, high inventory at ports and off-season demand have suppressed the market, leading to a focus on destocking by paper mills and traders, and caution in chasing up spot orders. In terms of operation, the core range of 4600-4900 fluctuates in the short term, with mainly low and long retracements or interval trading. Focus on downstream stocking recovery, inventory turnover, and pulp plant maintenance dynamics.