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Packaging Paperboard Price Hikes Again!
2021-08-02 09:00chinapaperonline.com
From the 2nd half of July, several mainstream packaging paperboard producers in China, including Century Sunshine in upper eastern China’s Shandong Province and Jianhui Paper in southern China’s Guangdong Province, began to install a RMB50/tonne price increase. And now, Shanying Paper, a top-3 packaging paperboard producer in the country, announced to add RMB100/tonne in sales price to all of its listed linerboard products effective from August 1st!

Market analysts believe producers’ new attempt to raise prices is not driven by strong demand. Rather, it is driven by rising production costs of paperboard producers who have been plagued by surging raw material and energy costs in particular since the 2nd Quarter! The industry-wide price increases in product sales in the first half of 2021, including the 20% rise in corrugating medium by July from a year ago that anchored averaged sales price at RMB4,030/mt, is not enough to packaging board producers as many of whom are reporting of falling sales and thinner earnings as a result of escalation in per metric ton cost in paperboard production, plus the disruption of logistics by poor weather condition and the global pandemic. Packaging paperboard producers will likely leverage the high converting season from August to improve sales and earnings. It is expected that more mainstream producers will join soon to form a strong wave of price increases.

Given the insufficient operating rates and relatively high inventories at mills and board converting facilities, however, it may be hard for converters and the box consumers to readily accept a full increase demanded by the board producers. There are still time and room for bargaining between board producers and converters.

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