Short Discounts and Early Hikes: What's Next for Paper Prices in September?

Recent market notices from several Nine Dragons Paper bases point to a short base-paper discount: from Aug 27 to Aug 31, prices were cut by RMB 100 per tonne. Dongguan Nine Dragons applied the RMB 100/tonne reduction to kraft linerboard, high-strength corrugating medium and recycled kraft linerboard, while Quanzhou Nine Dragons offered the same reduction on recycled kraft linerboard and high-strength corrugating medium.

Other major mills, including Guangdong Lee & Man Paper, Fujian Longhai Liansheng Paper and Dongguan Jinzhou Paper, also gave varying discounts on selected grades. This late-August push by packaging paper producers came with a narrow window, raising a key question: what signal does it send for the September paper market?

Looking at recent packaging paper prices, most mills had already implemented one or more rounds of increases from early to mid-August. By late August, however, prices held steady with almost no movement. As downstream demand softened, some producers announced on Aug 27 a five-day discount that ran through the final day of August.

September has long been a traditional peak season for papermaking and packaging. In past years, paper prices generally trended upward during the month. Industry insiders expect waste paper prices to rise first in early September, followed by base paper prices in mid-September. Against that backdrop, the latest discounted shipments appear to be a way to absorb earlier gains and set the stage for September increases.

Once September begins, holidays such as the Mid-Autumn Festival and National Day will gradually increase, potentially stimulating end-use consumption and supporting base paper demand. Perhaps reflecting this optimistic view, makers of specialty paper, ivory board and white board paper have already issued September price-increase letters, announcing hikes of RMB 200-300 per tonne.

On Aug 27, Shanying Paper Sales Co., Ltd. issued a price-increase notice: starting Sept 1, Spruce fully wood pulp extensible paper, Spruce kraft paper, Metasequoia extensible paper and Metasequoia kraft paper made at its Guangdong base will rise by RMB 300 per tonne on top of current prices. Guangdong Shanying's kraft paper and extensible paper lines are specialty papers, mainly used for cotton swab sticks, straws and paper bags.

Between Aug 23 and Aug 26, the four leading ivory board producers—APP Golden Paper, Chenming Group, Wanguo Paper and Bohui Paper—announced successive RMB 200/tonne increases for ivory board products. Wanguo Paper and Chenming Group moved on Aug 26 and Aug 25 respectively, while APP Golden Paper and Bohui Paper set their increases from Sept 1.

Earlier, on Aug 20, Dongguan Jianhui Paper had already released a price-increase letter: coated grey-back white board of all grades would rise by RMB 50/tonne from Aug 30, then by another RMB 50/tonne from Sept 15 on top of the Aug 30 price—a cumulative increase of RMB 100/tonne.

The pricing moves differ between corrugated paper and linerboard producers and specialty paper, ivory board and white board paper producers, yet their likely price direction in the coming period is broadly similar. For the former, discounts run from Aug 27 to Aug 31, but what happens after September remains to be seen. For the latter, early announcements with later effective dates make the path more direct.

Source: China Packaging Network (pack.cn); original link: http://news.pack.cn/show-378124.html