Correspondent | Yuan Yingqi
Edit | Chen Fei-ya
With the dual-control policies overweight energy, “limited power” of concern. Big power and paper companies are also affected.
So, this dual control energy consumption overweight will affect the extent to which paper companies produce? These effects will last long?
Production capacity is limited
August 12, the National Development and Reform Commission issued the “first half of 2021 all regions dual control energy consumption target completion barometer” in the total energy consumption control, there are still eight provinces (regions) as an early warning ( situation is very grim). The so-called dual-energy control was first proposed in 2015, aims to press provinces, autonomous regions, municipalities directly under the administrative area setting total energy consumption and intensity control objectives at all levels of local government supervision and evaluation. From the current situation, Guangdong, Guangxi, Fujian and Jiangsu province, such as paper, into the dual control energy consumption “double red” area.
For the above, many provinces and cities have introduced measures to cope. For example, in Guangdong since May this year, began the implementation of “open five to stop two” orderly power. Jiangsu is from September 15 onwards, the implementation of power rationing in some areas, time is tentatively scheduled for 15 days. Guangxi claim aluminum companies in the region since September monthly electricity load 1 – Basic monthly average power load on June 35% Yajian all times. The Nine Dragons Paper (2689.HK), Lee & Man Paper (2314.HK) and Shanyingzhiye (600567.SH) and so have many in Guangdong, Fujian plant shutdown release letter.
Soochow Securities According to statistics, since September 2021, including Nine Dragons Paper, Lee & Man Paper, Shanying, Sun Paper (002078.SZ), Chenming Paper (000488.SZ), APP, Bo paper (600966.SZ) and other leading paper companies, including a number of paper companies have stopped publishing the letter. According to the disclosed statistics stop function, September-October Save various kinds of paper production reached 0.7 million tons of white cardboard, fine paper (including paper and copper bis offset paper), corrugated box board, white paper yields were reduced approximately as 20,13,35,2 million tons, accounting for 2020 9 – the proportion of October this grade yields were 12.3%, 5.5%, 4.2%, 1.6%.
Current statistics of yield reduction for the paper industry limited impact on overall supply, the main impact of short-term balance between supply and demand. In the year 2020, my country’s output of paper and paperboard was 112.6 million tons, in recent years, the annual yield fluctuation range from 200 million tons to 5 million tons.
Price increases fill volume
Cut 700,000 tons of paper and paperboard will have no small supply of short-term pressure. Pressure supply already started at the end of the price.
The first price increase is wrapping paper companies. September 23, Nine Dragons Paper prices published plans, announced that from September 24 up-regulated in Dongguan, Taicang, Quanzhou, Tianjin, Shenyang base cardboard, corrugated paper and paperboard prices by 50-100 yuan / ton ; September 25 Nine dragons Paper prices again posted the letter, announced that since the beginning of October 9th raised all base containerboard, corrugated price, rose to 100 yuan / ton.
Eagle International followed suit, announcing plans to raise prices on all products since September 25 and October 8, in which the September 25 price increases of 50-200 yuan / ton, October 8 rose to 200 yuan / Ton. In addition, Lee & Man Paper, Dongguan Jinzhou Paper, Paper Silver State, also released 50-100 yuan / ton price increase letter.
Similarly, Sun Paper also announced that since October 1, for tissue paper price 100 yuan / ton, October 8 days before the pricing basis and then increase 100 / ton. The price increases is the third time since the company’s third quarter price increases on household paper.
Under the joint action of price and production cuts, there are differences in the effects of different businesses suffered. For example, the first price increase of Nine Dragons Paper might be fully hedged effects of reduced production, higher product prices and even good results. According to the letter down Nine Dragons Paper projections, and its main production base is located in Dongguan affected by discontinued eight days. By computing the total production capacity will cut 61,200 tons, and corrugated cardboard which is expected to cut 32,900 tons. The Nine Dragons Paper announced that since October 8 all of containerboard and corrugated base price increases were 100 yuan / ton. Moreover, the Nine Dragons Paper stock can make up short-term yields.
But for the white cardboard Bohui Paper is leading is another round of circumstances. Although this is a white cardboard cut up, but because of the early companies to accelerate the production capacity, supply-side pressures have significantly eased, resulting in white cardboard prices plunged, this cut can just digest inventory. Bohui Paper in Jiangsu have two production lines stop publishing the letter, stop for 11 days. It is estimated to reduce total production capacity of 11.7 million tons. Currently, Bohui Paper has no price action. Superposition early, white cardboard prices have a larger decline, so the current round of cuts for the Bohui Paper’s performance can be described as worse.
The “limited power” effect on the supply side of the paper-making enterprises has emerged. Due to supply and demand, price increases of different capabilities of different types of paper, the performance of listed companies will be differentiated.