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Will China Packaging Board Prices Decline Over The Long Run?
2021-11-29 10:00chinapaperonline.com
The nearly two-month's "up, up and up" in the price of packaging paperboard is finally fading and downturns are now the keynotes of the market in China. By mid-November, not only the planned price increase of 140gsm. corrugating medium was postponed to December, but also the current transaction price of the product already slid to the RMB4,000/mt range. At the same time, the market of recovered paper – the prime fiber for containerboard production in China – softened as well. Except in a few regions, the average price of locally baled OCC fell to RMB2,500/mt or even lower in the country!

More market observers believe the downturn of the board and fiber markets was pushed by changes in demand that failed to stay long and strong as expected, especially the early ending of the high export packaging season. Even the news of Nine Dragons' early announcement of its down-time schedules in the 1st Quarter 2022, which would affect about 500,000/mt of production, did not produce visible repercussions in the market.

It is known to all that the market is primarily driven by the following factors: 1) Fiber supply; 2) Paperboard demand; 3) Paperboard production and 4) Logistics and other factors. As 2021 is drawing to an end, the market trend in 2022 is now the main focus of analysts. With the deepening of society's awareness of the epidemic and more protective measures in place, China's economy and the world economy as a whole are expected to accelerate recovery in 2022. It is therefore expected that factors 2, 3 and 4 above will develop or improve in a positive direction. However, factor 1 or fiber supply may not change and even turns tighter and poses a rigid challenge to the industry! Having the scheduled start-up of more new capacity in packaging paperboard production in 2022, the industry will confront a tighter supply of fiber primarily composed of recovered paper. Until an effective solution is found in 2022, and even in the next few years, the market will still be troubled by the shortage of fiber supply. Under the general trend of strong fiber prices, packaging board price rises will continue to be the mainstream trend in the China market.

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