The downstream products of pulp can generally be divided into four categories: cultural paper, packaging paper, household paper and specialty paper. Different from the other three types of paper products, specialty paper has a wide range of downstream applications. According to data released by the China Paper Association, the production of specialty paper and paperboard in 2019 was 3.8 million tons, an increase of 18.75% over the previous year; the consumption was 3.09 million tons, an increase of 18.39% over the previous year. From 2010 to 2019, the average annual growth rate of production is 8.66%, and the average annual growth rate of consumption is 7.29%. Both production and consumption of specialty paper have maintained rapid growth in recent years.
The main products of Specialty Paper Enterprise A include paper for the tobacco industry, paper for home decoration, low-quantity publishing and printing paper, label release paper, transfer base paper, business communication and anti-counterfeiting paper, food and medical packaging paper, electrical and Industrial paper, etc. Different specialty paper products are affected by different industries, so the price transmission of the specialty paper industry chain is slow. The company said that the impact of the epidemic on it is limited, and the company is currently producing at full capacity. First, the company's foreign trade business accounts for a relatively small proportion and the main market is still domestic; second, due to the epidemic, orders for medical packaging paper and label paper have surged; third, " The "plastic ban" has brought rapid growth in the food and medical packaging paper market.
The main products of Specialty Paper Enterprise B include base paper for architectural decoration, base paper for transfer printing, digital media, paper for medical packaging and paper for food packaging. Companies said that due to the impact of the epidemic, the demand for medical packaging and food packaging was strong in the first half of this year, while other paper products were relatively weak. From the second half of the year, orders for various paper products have improved. Due to the "plastic ban", companies are optimistic about the future market for medical packaging and food packaging.
Through feedback from two large specialty paper companies, we found that the epidemic had a limited impact on the specialty paper market, and even orders for food and medical packaging paper surged during the epidemic. With the normalization of the epidemic, the "plastic ban" has also entered a countdown. The demand for paper products, especially food and medical packaging paper, has further expanded, and this part of the demand is still optimistic in the future.
Since the listing of pulp futures on November 27, 2018, pulp futures prices have trended in an "L" shape. In the second half of 2020, around demand, the center of gravity of pulp prices will continue to move upward. Since July, there has been a valuation restoration market for pulp futures. In late August, in anticipation of the peak demand season, the price of pulp and paper rose resonantly. As the "plastic ban" and "ban on waste" aroused widespread market attention, pulp prices continued to rise. However, as the last batch of commodities that rose in rotation, this round of rise in pulp futures ended hastily, and commodity prices were adjusted in stages. In November, the vaccine logic and inflation logic continued to strengthen, and the medium and long-term demand expectations brought about by the "plastic ban" and the "ban on obsolescence" were superimposed. Pulp prices continued to rise again, setting new highs this year.
In fact, the impact of the epidemic on domestic demand is more superimposed on the effect of the Spring Festival holiday. With the effective control of the domestic epidemic, the resumption of work and production proceeded smoothly, and the monthly output of the mechanism paper sheet has quickly returned to normal levels since March. Global pulp demand has also returned to the level before the outbreak at the beginning of the year, which means that a strong macro recovery in the future will have limited stimulus to the pulp demand side in a pro-cyclical period. The medium and long-term demand logic lies in the "potential demand for thematic books and high-end packaging paper."
On the one hand, themed books are expected to continue to support the cultural paper market in 2021; on the other hand, the impact of the "plastic ban" and "ban on waste" on wood pulp paper products is reflected in white cardboard and specialty paper. However, the "plastic ban" and "abolition order" have aroused widespread concern and discussion, and the gradual progress of policy implementation is not one size fits all. At this time, we should start to pay attention to the project's production schedule and policy implementation schedule, how much demand will increase, and when will it bring about substantial changes in the industrial chain.
In terms of supply, the future production capacity of global chemical pulp will be relatively stable, and the increase in capacity will mainly come from hardwood pulp. The global shipment volume of softwood pulp returned to normal levels, and the shipment volume of hardwood pulp remained at a historical high. my country's hardwood pulp imports also remain high, and softwood pulp has a potential increase in supply in the future due to the opening of the arbitrage window in the second half of the year.
At present, the performance of industrial profits is dazzling, the center of gravity of prices continues to move upwards, the inventory is in a new state of balance, the bottom of the industry cycle has slowly come out, and the pulp will continue to move forward in the long term. However, since the demand side has returned to a normal level, the supply side has always been relatively stable, and there is no mismatch in the fundamentals of the supply and demand structure. In the next stage, we will continue to pay attention to the changes on the supply side and the demand side. The simple chain repair thinking in the early stage will shift to the game between the year-on-year and the chain, and between expectations and reality.
