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What are the Reasons for the Recent Price Increases of Corrugated Board and Cardboard in China?

26 May, 2021

 

Recently, China’s corrugated board and cardboard market has seen a continuous trend of price increase of its products. This week, the manufacturers have raised the price several times at a growing rate. So, what are the reasons for the recent price increases? The following analysis might help you gain some insight.

 

Recent Price Increases of Some Companies

Table of recent price increase of Nine Dragons Paper

 

As can be seen from the table above, the price of corrugated board and cardboard in China was raised more rapidly in mid-May, with one price increase in corrugated board, one in cardboard and one in both, a phenomenon indicating the well-run status of manufacturers and a growing possibility of the implementation of increased prices. In addition, the amount of the third price increase was expanded from 50-100 yuan/ton of the first two price increases to 100-200 yuan/ton.


Comparison of Price Changes of Corrugated Board in 2020 and 2021

 

The price changes of corrugated board this year were very similar to those in 2020. In 2021, the price jumped at the end of the first quarter and then plummeted at the beginning of the second quarter, with the price after the fall still exceeding that before the rise. Similarly, the year 2020 saw the highest price of 3,974 yuan/ton in the first quarter and the lowest of 3,011 yuan/ton in the second quarter, a drop of 24.23%, while the highest price in 2021 reached 4,138 yuan/ton for corrugated board in the first quarter, down 11.48% from the lowest of 3,663 yuan/ton in the second quarter. In 2020, the price began to rise in early May and the trend continued until the end of the year (with a brief decline in mid-July). In 2021, the price also began rising in mid-May, but the rate of increase was larger than that of the previous year. In May 2020, corrugated board price rose by 50 yuan per ton, or 1.66%, while in 2021 it rose by about 300 yuan per ton in mid-May, or 9.01%, a significant increase from last year.

 

Changes of the average price of corrugated board in China


Reasons for the Expanded Price Increase in May 2021

 

The reasons for the expanded price increase in May 2021 are as follows.

 

  1. This year, the import of waste paper, the main raw material for corrugated board and cardboard, has been zeroed out (only some from Hong Kong has been imported to the Chinese mainland, but the amount is negligible). Therefore, the cost of waste paper remains a medium-high level, which, paired with the decreasing supply of this raw material in China, leads to the rise in corrugated board and cardboard price.
  2. Imports of corrugated board and cardboard will drop sharply this year due to factors such as the raging pandemic abroad and the soaring shipping costs. Moreover, the new domestic capacity generated for corrugated board and cardboard this year will reach the lowest level compared to that of the previous three years, resulting in an even greater supply shortage.
  3. In the wake of the weakening of the pandemic’s impact on the market in China, the domestic economy has gradually recovered and the demand has been gradually resuming its volume.

 

Judging by the above aspects, the corrugated board and cardboard market in China this year will still be very promising, and the price of corrugated board and cardboard is more likely to keep climbing. However, although the pandemic’s impact on the domestic economy has been significantly reduced, it will still take a long time for domestic consumption to grow at the original rate. At the same time, the overseas pandemic situation still has a certain impact on China’s economy, as shown in the shrinkage of the number of export orders as well as the slow growth of demand, which will to a certain extent affect the rise in the price of corrugated board and cardboard. Apart from that, it is now the off-season for corrugated board and cardboard, during which oversupply would pose a greater risk of the rapid price increase and decrease.

 

Source: 隆众资讯订阅号(作者:国亚萍)