The Paper-making Industry: It is hard to maintain the Prosperous Situation
[Abstract:]
(NPES International Printing E-Commerce Website 2008-09-22) The paper-making industry maintained prosperous since last year, which has been confirmed by the achievements of some listed companies in the first half year. However, I am afraid that the good times will not last long. Analysts believe that the paper-making industry will have difficulty to maintain the prosperous situation due to the effect of production capacity expedition, lower demand decline and the cost pressures.
First of all, the growth rate of industry fixed asset investment will lead to an increasing pressure on industry supply in the future and on the release of production capacity. Experience and statistics show that the construction period of paper-making industry is15-18 months in general, therefore, we can judge the industry's supply situation one year after by the current situation of fixed assets investment. According to the introduction of Luo Yamei, who is the paper-making industry analyst of RHB Securities, slow recovery have emerged in fixed asset investment growth rate since October 2006 and reached about 33% in the first half of 2008, it is expected that the pressure release of industry production capacity Will increase in the second half of 2009 to 2010. According to incomplete statistics, there are about more than 600 million tons of the release of new production capacity in the future next two years, which is equivalent to 9% of the industry total output around in 2007.Among them, white cardboard will be about 2,800,000 tons of production capacity released; Liner Board will be 200 million tons of production capacity released during this period; culture paper will be about 1,800,000 tons of production capacity released. ˇ°Although the new capacity may not be fully realized according to plan, after all, it is still a bigger supply increment to the industry." said by Zheng Kai, the paper-making industry analyst of Orient Securities.
Second, the industry will be a certain decline in consumption due to the impact of economic weakness. The degree of association between paper products demand and GDP is high, the growing domestic demand for paper products and the growth in GDP are basically synchronous according to the situation in recent years. The growth rate of domestic economic began to decline from the peak since the second quarter of this year, there is a slight downward in the demand of paper products, along with the further decline in the economy's growth rate in the future, it is expected that the growth rate of paper products consumption demand will decline.
From a single species of paper, the prosperity of pre-newsprint, white cardboard and copperplate paper is mainly affected by the short-term effect of the Olympic Games. There is information to show that the demand of Olympic-related paper increased 5% -8%. "Olympics only is a short-term factor, now the Olympics is finished and the demand of related paper priducts will fall." Zheng Kai said.
The favorable factors for demand lie in that the closure range of foreign production capacity should be greater than the range of new capacity, combined with slowing appreciation of the renminbi, China's export of paper products exists certain oppprtunity. ˇ°The surplus production capacity of copperplate paper, light coated paper, two-side offset paper, white cardboard is expected to be digested by export, so as to achieve the relative balance between supply and demand." said by Yang Chunyan , the paper-making industry analyst of Orient Securities.
Despite the above-mentioned advantageous factors of demand, analysts still believe the future industry demand will decline. Zheng Kai adjusted the industry demand growth rate to 8-10% of 2008-2009.
Finally, along with the production capacity expansion and declining demand, the industry is still facing the cost pressure. As far as the wood pulp, because Russia plans to increase export tariffs on logs, wood pulp price will increase in long term. ˇ°Russia will increase the price of wood pulp in Europe if he wants to raise the export tariffs; China's wood pulp price will be indirectly affected." Cheng Kai said. As for the waste paper, as a result of the recent decline in sea freight price, the price of waste paper has declined compared with the first quarter of this year, but it is still relatively high in the same period last year. (Author: Zhu Daibing)
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