Paper and board prices in China continue to decline in June

Feb 11, 2024

Prices for most paper and board (P&B) grades have continued to drop this month following erosions in May. The country’s economic recovery appears to be stalling, with a raft of weak Chinese economic data from industrial production and fixed asset investments into retail sales and trade falling short of expectations.

The resultant sluggish demand for packaging materials has kept recycled packaging board prices on the decline.

In the recycled containerboard sector, mills marked down their prices by RMB 50-150 per tonne this month. As of Wednesday June 28, the average price for high-strength corrugating medium in eastern China was down RMB 74 per tonne since late May. The average price for testliner shifted down by RMB 120 per tonne. Kraft-top liner’s average price was down RMB 112 per tonne compared to a month ago. The average white-top liner prices this week were down by RMB 50 per tonne from a month ago.

Slow sales and continued price decline have prompted some board producers, especially small mills, to take downtime.

Despite the doldrums, the volume of overseas supply has grown as imports of medium and recycled linerboard grades hit recent highs. According to Chinese Customs data, China imported around 312,000 tonnes of medium and 333,000 tonnes of recycled linerboard in May, up 38.03% and 100.57% year-on-year respectively.

A large share of growth came from leading Chinese board producers’ affiliated mills in Southeast Asia as they take advantage of the region’s relatively low recycled fiber costs.

Chinese traders are struggling with their business of board imports as they often find prices for domestic board products lower than those of their imported alternatives. The recent rapid depreciation of the renminbi against the US dollar has exacerbated the situation, making most imported recycled containerboard products less price-competitive.

The weakening RMB has also increased Chinese buyers’ costs of purchasing virgin fiber-based kraftliner (KLB) imports.

The most significant pressure has come from the new 600,000 tonne per year KLB machine at Ilim Group Ust-Ilimsk mill in Russia. The BM is still in a testing mode. Trader contacts in China reported that there is no offer from the mill yet, but they expect the new output to hit the Chinese market as soon as the later part of Q3.

Most suppliers cut their KLB import prices by $10-20 per tonne from the previous month.

Demand for folding boxes has also been slow in China. Despite virgin fiber-based boxboard producers’ unrelenting efforts to boost exports, the domestic market remains oversupplied with coated ivory board due to new capacity.

In eastern China, the average price for commodity coated ivory board moved south RMB 183 per tonne from late May to this week. In the southern part of the country, where competition is the most heated, some commodity grade coated ivory board is sold at even lower prices.

The average price for premium coated ivory board has remained steady in June. As for recycled fiber-based cartonboard, both commodity and premium grayback coated duplex board have seen their average prices edge down by RMB 25 per tonne this month.

The fine paper section has also seen further price declines in June.

Liansheng Pulp & Paper commenced production on a new 600,000 tpy uncoated fine paper (UFP) machine at its mill in Zhangpu, Fujian province, putting additional downward pressure on UFP prices in an already oversupplied market.

In the eastern part of China, the average price for UFP furnished with 100% chemical pulp drop RMB 550 per tonne compared to late last month. UFP furnished with a mixture of chemical and mechanical pulp saw its average price plunge by RMB 400 per tonne.

Coated fine paper (CFP) prices have also been dragged down. Premium CFP’s average price was down RMB 200 per tonne from a month ago. The average price of commodity CFP decreased by RMB 150 per tonne.

Despite the recent hikes announced for imports of bleached kraft hardwood pulp, the key furnishing for fine paper, market players indicated that fine paper prices have not showed signs of bottoming out as a seasonal lull in paper demand is likely to drive prices further down in July.

After plateauing for 12 months, domestic newsprint prices dropped RMB 50 per tonne at the top of the spread, as several key national newspapers have pressed down prices for new orders by RMB 50-60 per tonne.

The narrow crack is a result of the wide price gap between domestic newsprint and imported newsprint, which has encouraged publishers to favor the latter, said a source from a newsprint producer in China.

At present, Russian products are still playing a dominant role in China’s imported newsprint market. Offers of some Canadian and Nordic newsprint are very close to the level, but trader contacts said the depreciating Chinese currency is advantageous to Russian products as they are priced in RMB, shielding buyers from possible losses in exchange rate fluctuations.

This article was taken from PPI Asia, the industry’s most trusted pulp and paper market news and prices for Asia. Speak to our team to find out more and subscribe to our newsletters.