(from http://www.cnzhixiang.com)
China's box corrugated industry is in a major transition cycle!There are signs of any changes in the world.From the raw material channel, raw paper production and sales of structural changes, we can insight into the future box corrugated industry.
Influenced by macro economy, industry policy, market supply and demand and other aspects, the Chinese box corrugated market in the past two years ups and downs, the market rose and fell.The wild swings have been accompanied by concerns about fibre shortages, new capacity and overseas investment prospects.
From the current trend of the industry, what will be the change in the packaging industry in the next few years?What are the coping strategies of terminal downstream secondary and tertiary plant groups?This article will elaborate the structural changes of the corrugated industry from the aspects of raw material channels, raw paper production and sales, hoping to bring inspiration to the downstream carton processing industry.
1, reduce the import of waste paper, finished paper quality decline or become a foregone conclusion
In the past two years, the policies related to waste paper have been released intensively, and the control has been increasingly intensified. Moreover, relevant departments have vowed to achieve zero import of waste paper by the end of 2020.Although the final result has not been finalized, but the future of China's waste paper imports continue to decline has been basically the consensus of the industry.
FIG. 1· monthly import statistics of waste paper in China from 2017 to 2019 (thousand tons)
▲ data source: general administration of customs
Imports of waste paper fell 29.5 percent in the first three quarters of 2019 compared with the same period last year, according to customs data.The impact of the reduction of waste paper import on the production of corrugated packaging on the one hand in fiber quantity, on the other hand in fiber quality.
From 2012 to 2016, China imported more than 28 million tons of waste paper annually, which is an important fiber source of Chinese recycled paper such as box corrugated paper, white board paper with gray bottom and newsprint.In the future, the fiber quantity gap caused by the reduction of this part will be supplemented by the import of recycled pulp, the increase of waste recovery in China, and the overseas transfer of new production capacity.However, from 2018 to 2019, due to the decline in the domestic production of box corrugated paper, white board paper with gray bottom and newsprint, the influence of fiber quantity is not significant.
In recent two years, the reduction of waste paper import volume has a more direct and significant impact on the quality of domestic paper mills.Because the content of "fresh" fiber in American waste is very high, and Chinese waste is not substitutable in this regard, the quality of domestic recycled paper is largely dependent on American waste.A decline in the quantity of waste paper and other imported paper containing "fresh" fibre has led to a decline in the quality of recycled paper.This problem is particularly serious in small and medium-sized paper mills.
2. The new way out for Chinese paper enterprises: the industry layout is extended upward and downstream, and the foreign market is extended
The original Chinese corrugated packaging enterprises basically based on the domestic, in addition to relying on the overseas raw material market, production, sales and other aspects of self-sufficiency in China.However, in the past two years, there have been two significant changes in the industry layout: the upward and downstream extension and the expansion to foreign markets.
On the one hand, many enterprises in the industry not only actively expand the upstream raw material market, but also further extend to the downstream market.For example, nine dragons paper, the leading paper company in the industry, increased investment in wood pulp and recycled pulp in the United States and Malaysia, and purchased several packaging plants to further expand its downstream industrial layout.Compared with the mature upstream and downstream systems of European and American paper enterprises, there is still a huge space for the upstream and downstream expansion of Chinese paper enterprises.
In addition, in response to the policy adjustment on waste paper import, Chinese paper companies have also increased their industrial investment in overseas markets in recent years, especially in southeast Asia.Southeast Asia may become one of the important production bases of Chinese paper enterprises in the future.
Systable 1· statistics on the investment of Chinese corrugated enterprises in other parts of Asia
▲ data source: enterprise open information
3. The launch of new production capacity was delayed, and a large number of production capacity was cancelled or transferred
By the end of the third quarter of 2019, the Chinese market has put in nearly 3 million tons of new production capacity this year, which is quite different from the planned production capacity announced before.Even taking into account the new capacity in the fourth quarter, we estimate that the total new capacity for the whole year will be around 5 million tons, less than 50% of the planned volume.That means more than half of new capacity projects this year have actually been delayed or cancelled.This has become apparent in 2018.
Previously driven by the good market in 2016-2017, the market announced a large number of new capacity projects of box corrugated paper.But with the market weakening in late 2018, the surge in new capacity has cooled significantly.At present, according to our incomplete statistics, there are still more than 11 million tons of new production capacity of box corrugated paper in China planned for 2020 and beyond.We anticipate that this capacity will not be fully operational and that a significant amount may be cancelled or transferred to southeast Asia.
Fig.2 new capacity statistics of box corrugated paper in China (tons)
▲ data source: paper federation
4, box corrugated paper output fell: the first time in nearly ten years
As the paper with the largest output in China, the output of box corrugated paper has maintained a stable growth trend before 2018.2017 was the highest production and sales volume in nearly a decade.In 2018, the output of box corrugated paper showed negative growth for the first time, the operating rate of paper mills decreased significantly, and the shutdown of the market occurred from time to time.
The negative growth of output in 2018 is mainly due to the following factors. First, the growth of domestic demand is slowing down and trade frictions between China and the us have become apparent.Second, the import of waste paper is limited, the national waste price is high, supported by the paper factory cost, the box corrugated paper price is high, so a large number of imported paper into the Chinese market.Third, in the second half of 2018, the price of corrugated board continued to drop, the profit narrowed, and the enthusiasm of paper mills was not high.
FIG. 3 demand and supply statistics of Chinese box corrugated paper from 2010 to 2018
▲ data source: Fastmarkets RISI
5, corrugated cardboard imports increased: imported paper or will become a stable source of packaging paper in China
At the same time as the decline in domestic production, China's imports of corrugated cardboard box growth.In particular, the import volume of corrugated paper was as high as 650,000 tons in 2017 and about 1.11 million tons in 2018. Before 2017, the import volume of corrugated paper in China was no more than 100,000 tons per year.For carton paper, the annual import volume was basically maintained at 500,000 to 600,000 tons before, and also showed a significant increase in 2018.
From January to August in 2019, the import volume of carton paper was basically flat compared with the same period last year, while the import volume of corrugated paper increased by 16.5%, both of which slowed down.
Based on our tracking of monthly import volume of corrugated cardboard, we believe that the change of corrugated cardboard import volume is highly correlated with the price fluctuation of corrugated cardboard in China in the previous two months.Higher prices in the Chinese market have been followed by higher imports.
In the future, the import of corrugated cardboard will become one of the stable purchasing sources for Chinese packaging carton users.
FIG. 4 import situation of carton corrugated paper from 2013 to 2019
▲ data source: general administration of customs
Overall, the next five years of China's box corrugated industry is in a major transition cycle.From the raw material channel, raw paper production and sales, are facing greater structural change pressure.For the raw paper industry, in the next five years, the industry concentration is likely to increase significantly, and the discourse power of medium and large paper companies in the upstream and downstream will continue to increase.Changes in the upstream paper industry will have a significant impact on the downstream carton processing industry.How to improve the industrial concentration, expand the source paper procurement channels, and provide integrated packaging services for end users will become the main issues facing downstream processing enterprises.