Through years of restructure and the relatively quick process from significant reduction to the complete stop of consuming imported recovered paper in particular, consolidation of China's containerboard industry is much greater than a decade before and influence of the top-3 companies - Nine Dragons, Lee & Man and Shanying - on the market is stronger than ever. In the 2nd half of April, for example, Nine Dragons lowered sales price of its linerboard and medium. All other producers, especially mid-to-small producers, could only follow suit. Soon after the May Day holiday, however, Nine Dragons switched to raise sales price, leaving almost all manufacturers to busily turning around and sending price increase letters to customers. Price of containerboard was back to the rising track in the China market by mid-May, with more and greater increases. Efforts of the top-3 companies – Nine Dragons, Lee & Man and Shanying Paper – drove linerboard and medium to go through 5 successive price increases in one month and gained all together RMB700/mt by the 2nd half of May. Price of recovered paper followed and softened when large companies lowered their buying price and volume in the latter part of April and firmed up by mid-May when large players returned to the market with a better price for more order volume, which sent price rise beyond RMB100/mt. In late May, however, under the impacts of government controls on prices, packaging paperboard sold by Nine Dragons and other large producers dipped RMB50-100/mt in price and the market had to respond accordingly. All this has made analysts convinced that by now the market is in the hands of large companies!

It is true that on-going changes affecting global pulp and recovered paper market, ocean shipping and especially that recovered paper supply is only available from China's domestic sources nowadays have tightened fiber supply and increased fiber cost of the industry. At the same time, rising demand for packaging boxes as a result of economic recovery is up against relatively less new capacity start-ups in China’s containerboard industry in the next 3 years. These drive up prices of linerboard, medium and recovered paper in the country. People should also be aware that more large manufacturers of the industry, including the top-3, are now publicly traded companies. They need to present to the market better performance reports in order to strengthen its credibility, raise more funds as fresh blood for their companies’ growth and enable them to stay healthy, deal with possible risks and maintain their leading position in capacity expansion, market development and product research and development. They will use their respective strength and judgment in managing the scale and progress of their raw material sourcing and finished product sales. Therefore, it is no surprise that the market dances to their beat!

In view of the above and pending for new and fundamental changes in the industry, large companies led by the top-3 companies – Nine Dragons, Lee & Man and Shanying Paper – will play a greater role in China’s linerboard, medium and recovered paper market in the 2nd half of 2021 and into the future. On the whole, there is a high probability that the China market will stay on an upward trend. During which, people may see a new scene in which the traditional low season will not be low and the high season becomes higher. Of course, if paper prices rise too fast and downstream orders cannot keep up and are subject to the impacts of administrative controls on price, the probability of "fast rise fast fall" in price will become higher, and many small and medium-sized companies may be exhausted or even unable to cope with.