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China Market Remains Volatile
2020-04-21 08:57chinapaperonline.com
Unsteadiness continues into mid-April when prices of recovered paper and finished paper and board showed ups and downs in various regional markets.

On recovered paper, balers in southern and eastern China began their new attempts to install RMB50-100/mt to the price of their April deliveries, against a RMB30-50/mt drop in central and upper China markets. The recent release of 1.17 million/mt of recovered paper import quota by the Chinese authorities, the 5th lost for year 2020 and substantial in volume for a lot, seemed to not immediately impact on the China market yet as Chinese mill buyers with the quota have to battle to secure supply amidst price surges in the global market. This is especially true for OCC in USA where commercial generation is down by half after the outbreak of the coronavirus in the country. Also not sure is the steadiness in China’s local generation and supply. Concerns of rebound of COVID-19 in the country is catching high social attention and making waste paper collection more difficult, not to speak of sorting and delivery thereafter.

On containerboard sector, China market remains soft. The -11.4% declines in China’s exports in the 1st Quarter 2020 apparently hurt corrugated box consumption and together with general weakness in domestic box demand forced price of containerboard, with corrugating medium in particular, down as much as RMB200/mt in early April from a month ago. In a desperate effort, more and more mid-to-small mills announced at least a RMB50/mt price increase from April 1st, though large players stayed calm with their set strategy for price cuts. Comments from market analysts are that large players are looking beyond the 2nd Quarter and believe that it is better to lower inventories by price cuts and gearing-down operation in view of the uncertainties in demand growth in the year. Although +90% are now back in operation, many containerboard mills are taking maintenance downtimes from the last week of March and production suspension may extend to the 3rd week of April, which will bring operating rates down below 70% in southern China’s Guangdong Province alone!

The spread of COVID-19 to the whole world has created more uncertainties and reduction in China’s export orders. Demand for export packaging weakens as a result. More market analysts agree that China’s recovered paper market will remain fragile, any price increases may quickly be overwhelmed by price decreases. For containerboard market, it will undergo more negative pressure to force substantial machine downtimes in the 2nd Quarter at least.

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