The hottest paper products raise the price tide ag

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First, the rise in the price of papermaking raw materials and its causes. China's current papermaking raw materials include waste paper, wood pulp fiber, straw pulp, etc., of which waste paper and wood pulp depend on imports, and wheat straw has gradually become a resource for papermaking enterprises. In 2004, the price of papermaking raw materials experienced a process of rising and falling. In 2005, due to the strong economic development in Southeast Asia and China and the growth of global demand, the price fluctuation of papermaking raw materials intensified

first of all, while the world pulp inventory has also dropped to a historical low, the price of pulp in the international market has risen again. From the beginning of the year to the present, the price per ton of pulp has risen by more than $100 on average

in terms of waste paper trade, since waste paper is mainly exported to the United States after Christmas in December, the recycling of waste paper is affected due to the harsh winter climate and humid weather in the northeast and central and western regions, resulting in an increase of $10/short ton in the price of waste paper in the U.S. market, an increase of about 7% over the same period last year

with China becoming the second largest paper consumer after the United States, the rapid growth in demand for paper products and papermaking raw materials has gradually made China a barometer of the price of papermaking raw materials in the international market. In terms of pulp, Western Europe's commercial pulp accounts for the largest share of the international market, reaching 32%, but the demand growth has stagnated; China's demand share for commercial pulp has increased from 10% in 2002 to 12% at present, and is likely to rise to 14% in 2008, becoming the country with the fastest growth in demand for commercial pulp. At present, if Western Europe has a driving force for the commercial pulp market, China's role in the international market is also growing. Compared with commercial pulp, China accounts for a larger proportion in the international waste paper trade market. 43% of the exports of the main waste paper exporting countries, the United States and 70% of Japan, are sold to China. The strong growth of China's demand for waste paper is the main factor in the rise of waste paper prices

as for the price trend of papermaking raw materials in 2005, we believe that there is no big change in the demand for pulp in the international market, and there is no big gap in the supply of pulp. China's strong demand alone will not ultimately affect the general trend of international pulp prices; In addition, due to the completion of the maintenance of major international pulp mills in the second quarter and the commissioning of new international pulp projects in the second half of the year, the trend of paper raw material prices in 2005 should be basically similar to that of last year

II. Price fluctuation of paper products caused by the price rise of raw materials

the cost composition of paper-making enterprises is mainly wood pulp or waste paper, water, electricity and other power, logistics and storage, etc., and the ability of enterprises to control these costs is limited. The main power costs such as coal and electricity may continue to increase in 2005, and the high oil prices may also increase the transportation costs and other chemical additives prices. These all pose considerable pressure on paper-making enterprises. Most large international paper-making enterprises believe that the time is ripe to adjust the prices of paper products. The paper price in the Asian market increased in the first quarter, but the repeatability accuracy of some experimental machines was not very good. This is the seventh consecutive quarter that the paper price has increased. Meanwhile, PanAsia paper company also predicted that the paper price will continue to increase by 5% in the second quarter. The reason for the rise in paper prices is not only the rise in pulp costs, but also the growth in demand in Asian countries. From the perspective of China, many newspapers and periodicals continue to increase their circulation through revision and expansion. Last year, the circulation of newspapers nationwide increased by 8%, and the growth rate this year is expected to maintain at this level. The price of coated paper also rose significantly. A few days ago, Sappi European paper also announced that it would increase the price of coated paper from April by EUR per ton; The growth of supply and demand in China's copper paper market in 2005 was basically balanced. Under normal circumstances, the price would not fluctuate significantly

III. impact of listed companies

as the anti falling sector in 2004 and the paper industry generally favored by institutions in 2005, the industry index and the stock price trend of major listed companies represented by Chenming Paper and Huatai shares in the new year of 2005 were significantly weaker than the market, and the trading volume ratio was also small. There are many reasons for the weakness of the papermaking sector, including the RMB appreciation self-healing material, a new material that can automatically repair objects when they are cracked or damaged. The expected weakening, technical compensation and the pressure of advantageous papermaking enterprises' financing on existing companies are also the main reasons. Of course, the rising cost of raw materials is also the main reason

how much impact the rising price of papermaking raw materials will have on enterprises should be analyzed from two aspects

first of all, it depends on the ability of enterprises to control costs. Enterprises can use both chemical pulp and a certain amount of mechanical pulp in production, and some enterprises use a considerable amount of waste paper. When the pulp price fluctuates, enterprises can choose to change the proportion of raw materials and use less chemical pulp. Paper enterprises can reduce costs and stabilize the pulp price through this method. At present, many large paper-making enterprises in China have invested in chemical pulp projects, most of which are used for the production of white paperboard and paper. For example, the new projects of Chenming paper, Huatai Co., Ltd. and Bohui paper are equipped with chemical mechanical pulp production lines, which can effectively control the cost of production materials after these projects are launched. When the source and variety of pulp are certain, paper enterprises can also establish a stable supply relationship with suppliers by means of group procurement and long-term contract. Although this method has little effect, it can also stabilize the pulp price to a certain extent

secondly, it depends on the ability of the industry to transmit the pressure of rising raw material prices to downstream industries, and whether the gross profit margin of the industry can be maintained or improved during the transmission process. At present, the price of domestic paper products is still determined by the market. There are many paper-making enterprises, and the competition is very fierce. Although everyone is facing the same rising pressure of raw materials, the possibility of joint price increase is still relatively small, which depends on their respective negotiation ability and customer relations. The sharp fluctuation of coated paper price in the short term last year was caused by the short-term price alliance; This year, some large paper-making enterprises have the trend of jointly raising prices. Light coated paper, white cardboard and kraft linerboard are all varieties of negotiated price increases. However, it is unknown how long this price increase strategy will last and how effective it will be

even so, by analyzing the specific situation of domestic paper product market and enterprises in 2004, we can still find that the cost transfer rate of paper enterprises has been significantly improved. In the case of rising pulp prices, the price increase of most types of paper products is equivalent to that of raw materials, and there is still room for the price of downstream paper products to rise; The gross profit margin of some enterprises has decreased slightly. At present, the trend of paper-making enterprises to ensure the stability of gross profit margin through large-scale operation is very obvious. Enterprises with scale advantages and high-grade products have a stronger ability to raise prices

in general, we believe that the rise in raw material prices has a certain impact on paper enterprises, but the impact is greatly weakened. The performance growth trend of the industry and major companies is not enough to be reversed in the next step

IV. rating of key companies

from the perspective of the P/E ratio of the entire paper industry, 80% and 90% of the results of paper making still need to be in the laboratory; The small scope of enterprises and the lack of R & D funds have been equivalent to the pricing level of the international paper industry, and the price earnings ratio of advantageous enterprises below 15 times has been underestimated. From the perspective of enterprise fundamentals, Chenming, Huatai, Bohui and Yueyang all increased their production capacity in 2005. The breaking down of share prices of these advantageous enterprises was not caused by sudden changes in fundamentals, and the investment opportunities after the correction deserve attention

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