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China's Market Prices: Scrap Prices Soared 5 Years To The Highest Record, Multi-factor To Promote Prices Continue To Rise
Aug 14, 2017

Since 2017, the purchase price of waste paper has been higher, in early August, many companies to increase the purchase price, the majority rose in 30-300 yuan / ton. In fact, from November 2016 onwards, waste paper prices have risen sharply, as of December 31, 2016, waste paper prices reached 1736.44 yuan / ton, an increase of 32%, as of July 28, 2017, waste Paper prices reached 1919.19 yuan / ton, the price since the highest price since 2012. Some analysts said that the paper mills on the one hand to stop the maintenance of the market to provide a reasonable supply, on the other hand actively purchase raw materials, which pull the price of waste paper. Analysts said the rising price of waste paper is mainly due to the reasons for the supply side of the contraction, and that the price of waste paper will continue to rise for some time, but will not keep up.

Exchange rate, policy and other effects of supply side contraction, resulting in rising prices of waste paper

Waste paper is an important raw material for the production of finished paper, and because China's current waste paper recycling system is not perfect, foreign countries have a very good waste paper classification, and it also contains more wood fiber, more to ensure the quality of recycled paper , Therefore, in our country, many paper mills are mainly imported from abroad.

This round of waste paper, paper prices rose the reason, mainly the supply side of the contraction. Because most of the waste paper is imported from abroad, there is a problem with the exchange rate. It is reported that since the first quarter of 2017, the dollar index continued to decline, the relative depreciation of the dollar, will also be driven by the dollar-denominated imports of waste paper prices rise. In addition to the impact of the exchange rate, as well as the current China plans to prohibit the import of unclassified waste paper and strengthen the supply of environmental control reasons, which also caused most of the papermaking enterprises to transfer costs through price increases.

July 20, 2017, the Ministry of Environmental Protection said that by the end of 2017 before the ban on four types of 24 kinds of solid waste imports, including raw materials, waste vanadium slag, unclassified waste paper and waste textile raw materials and other highly contaminated solid waste.

On July 27, 2017, the General Office of the State Council issued the "Implementation Plan for the Implementation of the Regulation on the Administration of the Importation of Solid Waste in the Entry of Foreign Waste". The "Plan" put forward the eighteen requirements for regulating the entry of foreign garbage and solid waste.

It is reported that the end of the implementation of the adjustment of the import of waste management directory, the impact of papermaking is one of the non-sorted waste paper imports will be banned. The state is only one of the number of prohibition, which there is a certain impact, but the impact is not large.

Import restrictions policy mainly points to mixed waste paper, according to China Customs data, 2016 China's imports of 28.5 million tons of waste paper, which hybrid imports of 568 million tons of waste paper, accounting for about 20%. The waste is mainly used for the production of gray paperboard, in addition to the board / corrugated paper factory also part of the use of waste as a supplement. The introduction of the policy to promote the domestic factories have to increase the recovery of waste, will promote the domestic waste and other waste paper prices up, driven by the cost of gray under the board, box / corrugated prices are expected to follow.

The above-mentioned policy of prohibiting the import of unclassified waste paper has the greatest impact on the white paperboard from the production point of view, but the impact of waste paper such as 8 # (old newspaper) and 11 # (old newsprint) is great for large enterprises.

Market volatility is too large to cause "panic" waste paper prices, paper mills began to stop maintenance and acquisition of raw materials

In the face of rising prices of waste paper is still rising prices, due to the impact of imported foreign garbage policy, waste paper prices rose, but in his view, this price rise is "panic".

It is reported that China's environmental policy has become more stringent, which is a high impact on the pollution of the paper industry.

August 3, the State Administration of Work Safety issued a formal announcement, announced in early August sent 16 inspection teams on the 31 provinces (autonomous regions and municipalities) to carry out safety inspection; Twelfth National People's Congress Standing Committee twenty-fifth meeting Voting passed the Environmental Protection Tax Law, January 1, 2018, began to levy environmental taxes.

At present, the investment in environmental protection equipment of papermaking enterprises is 300-400 yuan / ton. The operating cost of large-scale environmental protection equipment is 40-100 yuan / ton (the size will lead to the difference between the investment and operation of tons of paper). Considering the economies of scale, small paper costs are higher. Environmental enforcement efforts to become more stringent, small businesses have to add investment, and tons of paper costs will be greatly improved.

August 4, Shandong Province, Weifang City, Huisheng Paper Company, a staff member mentioned, "our environmental protection investment is great," the rise in waste paper prices, mainly environmental aspects and policy reasons.

In addition, the paper mill joint price increases, large-scale paper mills to form a tacit understanding with each other on the one hand to stop the maintenance of the market to provide reasonable supply, on the other hand actively purchase raw materials, but also pull the price of waste paper, therefore, to promote the finished product market.

In the current round of paper prices in the process, the paper mills out of the base paper are generally through the middle dealers down hand, and then sold to the downstream printing plant. Many brokers are predicting the price will rise, so get goods from the paper mill, the cover paper reluctant to sell, store to the high and then down to the terminal manufacturers.

The rise in waste paper prices to large and medium-sized paper mills to obtain high returns, Long Yingying three giants to surrender huge profits transcripts

Although the price of raw materials continues to rise, but the paper industry in those who have a complete industrial chain of listed companies, but it constitutes a big positive.

If the ban on the import of US mixed waste paper policy implementation, for the domestic paper company will increase the reshuffle efforts. This is good for large and medium enterprises, because large companies with overseas channels, you can buy qualified label American waste paper, and no channels of small businesses, because there is no recycling channels, had only imported mixed waste paper, and now if prohibited The raw material is difficult to guarantee.

Nine Dragons Paper started with waste paper, with a stable domestic and international waste paper recycling channels; Liwen paper box corrugated paper size second only to Nine Dragons Paper; Shanying Paper is currently a small number of domestic and foreign waste paper acquisition Channels, packaging base paper production, cardboard, cardboard box manufacturing one of the enterprises, with a more complete industrial chain.

2017 fiscal year in the first half, Nine Dragons Paper's net profit of 1.439 billion yuan, an increase of 4910.53%, the first quarter of 2017, Shanying Paper operating profit and net profit were sharply higher, 600%. Liwen paper in the first half of 2017 fiscal year, the expected equity holders should account for earnings growth of more than 50%. 

Will the price of waste paper go up again? The answer is yes

August 4, Shenzhen Hefeng Paper, a staff member said that in previous years did not rise so much, that is, this year, a sharp rise, when asked to predict the price of paper market outlook, the staff said : "This is like the same stock speculation Well, rose to a certain extent, it is impossible to rise again."

On the same day, the staff of the above-mentioned Huisheng paper tube also clearly expressed their views: "Now what are up, the price of waste paper hundred percent will certainly rise."

Analysts show that "will be up for a while, but will not keep up." In his view, has been sustained prices, will inhibit demand.

From the general trend point of view, the above policy for the import of non-sorted waste paper will lead to the price of imported waste paper, coupled with limited quotas, domestic waste paper prices in the future or will enter the rising channel.

Waste paper and box corrugated board after entering the September season, may be further up. This is mainly the downstream demand to boost, make up inventory factors, environmental supervision and the supply of waste paper and other reasons.


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