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Guaranteed supply and controlled price paper enterprises actively respond to challenges

release date: Source: China Securities News

the price of raw materials such as upstream pulp has risen, and the profits of paper enterprises have been squeezed. Facing challenges, enterprises actively respond. Some enterprises strategically purchase raw materials and lock in profits in advance; Some enterprises dynamically adjust the inventory of raw materials, or use the futures market for hedging to avoid the risk of price fluctuations

experts pointed out that ensuring supply and controlling price is conducive to maintaining the ecological stability of the industrial chain

raw material prices rise

affected by the increase in market demand, the rise in pulp prices and the reduction in the supply of waste paper raw materials, paper prices have risen one after another. While the cost of raw materials rose, the profits of paper mills were squeezed

Zhao Jinghao, the relevant person in charge of a base paper enterprise, told the China Securities Journal that the price of upstream raw materials rose and the cost of papermaking increased. If you don't raise the price, the profit margin will be smaller, and you can only raise the price in line with the market. Summer is approaching, and the downstream is about to usher in the peak consumption season, with strong order demand

Wang Yuzhe, Secretary of the board of directors of Xianhe shares, told China Securities News that in order to ensure the healthy development of the industrial chain, midstream enterprises need to raise prices or maintain high prices

data show that since 2003, China's pulp import volume has been in the forefront of the world, and the demand is increasing. Among them, the import volume of wood pulp reached 30.64 million tons in 2020, accounting for 72.8% of the total consumption of wood pulp. From July last year to March this year, the average price of wood pulp rose by more than 400 US dollars/ton

Lou Zhongping, chairman of Yiwu Shuangtong, the world's largest straw manufacturer, told the China Securities Journal that the futures price of raw pulp for paper straw has risen all the way since 4500/ton in November last year, reaching a maximum of more than 7500/ton, an increase of nearly 70%. At the same time, the price of PLA, the raw material of degradable straw, is not lower than that of electronic tensile testing machine, which adopts the floor type. The supply side capacity increased in August last year, but the current price remains at a high of 30000-40000 per ton

Chen Wei, the relevant person in charge of a leading listed company in the breakdown of the electronic communication industry in Zhejiang, told the China Securities Journal that the company has a long-term agreement with raw material customers and has a certain inventory. However, for small and medium-sized enterprises with insufficient inventory and weak bargaining power, when the upstream wood pulp supply is tight, they can only buy it from the spot market, and the price will be much more expensive

"the upstream raw material market is highly concentrated, and downstream manufacturers need strategic procurement. As the price of upstream raw materials rises, many paper mills take advantage of the trend to raise prices downstream." Hu Xin, Secretary of dashenda, a leading domestic corrugated box and paperboard production enterprise, said

facing cost pressure

in the production workshop of Chen Wei's company, the production line machines are fully turned on, and the roar is endless. Chen Wei said that at present, the company's orders are relatively saturated, and the orders have been arranged until June. Because it is difficult to grasp the follow-up trend of raw material prices, even leading enterprises can only accept orders within three months at most

Hu Xin said that even for leading enterprises such as Da Shengda, raising prices is not easy. "It is impossible to continuously raise prices like upstream enterprises. The price linkage mechanism will be started only when the cumulative increase in the price of base paper is large. The company's customers are basically top 500 enterprises in China or the world. There is a process of price increase negotiation, which takes time to transmit to customers."

Hu Xin frankly said that after the price rise in 2017, the company has been more experienced in dealing with this situation, such as pressure rise rate, pressure control accuracy, etc. However, the upstream manufacturers are relatively stronger, with a high degree of industry concentration and a large voice

Zhao Jinghao told China Securities News that small and medium-sized companies have relatively weak bargaining power and high transmission cost pressure; Some leading companies have strong pressure bearing capacity and take advantage of the trend to expand market share. The strategy they adopt is to carry it without raising prices

China Securities Journal found that some manufacturing companies, especially export-oriented enterprises, are in short supply of cartons. In addition, they cannot order sea containers, resulting in a backlog of goods in the warehouse

Hu Xin said, "this wave of market has not reached a 'hot' level, and the shortage of cartons is not caused by the inability to buy raw materials. In the past two years, large paper mills have increased more production capacity, and some upstream merchants have adopted the 'hunger marketing' strategy, resulting in some paper mills with weak bargaining power unable to buy base paper."

accelerate the industry reshuffle

"our straw products raise the price by 5%, and the brand popularity is further increased by -8%, but compared with the price increase of raw materials, it is much lower. As a leader in the industry, we are very cautious about raising the price of products, and we should consider the pressure capacity of customers, sacrifice some profits, and try to keep the price relatively stable." Lou Zhongping said

Chen Wei told China Securities News that the impact of the rise in the price of upstream raw materials on the company is not obvious at present. Through its own efforts, the company can absorb the pressure of rising prices of some raw materials. At the same time, part of the pressure of rising costs will be transmitted to the downstream through product price adjustment

"the prices of pulp, logistics and energy in the upper reaches of the industrial chain have risen, and the production costs of enterprises have increased, but since this year, the tax incentives for small and micro enterprises have been strong, which has eased the pressure on the company's capital flow. The company will continue to implement the circular economy model, make efforts in the recycling of waste paper, improve the utilization rate of waste pulp, and further enhance the competitiveness of products. It will solve the problems such as the lack of utilization evaluation and the long cycle of formulating new material standards." The relevant person in charge of a small and medium-sized paper mill told the China Securities Journal

due to its long-term cooperation with upstream paper mills, industry leader dashengda has advantages in purchasing base paper. "We need to comply with market trends, predict in advance, communicate with upstream and downstream customers in time, and actively perform strategic procurement." Hu Xin said

small and medium-sized enterprises also have their own countermeasures. According to Hu Xin, some small and medium-sized enterprises also adopt "strategic" procurement methods. For example, it is expected that the price of base paper will rise and stock up at low prices for several months in advance. Because there is a transmission process of price rise, small factories can store goods for a period of time

Zhao Jinghao said that the position of stock up can be adjusted dynamically. With a strong momentum of price rise, the inventory is a little higher. Usually, the inventory is reserved for about a month

for the future trend of raw material prices, Lou Zhongping predicted that the price rise tide in June and July would ease. When the price of raw materials was low last year, the company prepared some inventory in advance and hedged risks through the futures market

Hu Xin suggested that when upstream raw material enterprises raise prices, they should give midstream enterprises some living space. This is conducive to the stable development of the entire industry. "In a word, guarantee supply and control price."

insiders told China Securities News that the rise in product prices will accelerate the industry reshuffle. "For small and medium-sized enterprises with weak bargaining power and low market share, they need to focus more. For example, they used to be the national market, but now they are only core cities and core channels."

some enterprises use the futures market to hedge against the risk of price fluctuations. For example, golden sun and Shanying International announced in late April that in order to reduce the adverse impact of raw material price fluctuations on the company's production and operation, they planned to carry out hedging business, make full use of the function of the futures market, lock in the purchase price of raw and auxiliary materials, and effectively manage the risks caused by price fluctuations

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