Core view: affected by the global supply chain problems and the international geopolitical situation, the current price of pulp has risen one after another, the cost support is superimposed, the marginal of supply and demand structure is better, the paper enterprises have a strong willingness to support the price, and the price increase letters are frequent. We observe that the recent rise has been partially implemented, and the bottom of the industry's profitability can be improved. Under the integrated layout of pulp and paper, The leader has outstanding cost advantages and bargaining power, and is expected to take the lead in benefiting.
Pulp: global pulp supply fluctuates rapidly. Since the end of last year, the global pulp supply side has been disturbed by a number of emergencies, such as extreme weather in North America and strikes by Finnish workers. With the superposition of repeated epidemics, pulp shipments and China's imports have declined. In 2021, China's total annual wood pulp imports were 23.7 million tons (- 6.95% YoY), a decrease of 1.77 million tons, including 1.91 million tons (- 23.51% YoY) in December. As 65% of China's pulp demand depends on imports, under the expectation of short-term supply shortage, the spot prices of pulp futures contract, coniferous pulp and broad-leaved pulp have risen one after another since the end of 2021, with a low increase of about 40%. The recent escalation of the conflict between Russia and Ukraine may exacerbate the uncertainty of short-term supply.
Short term tight balance and long-term loose supply of pulp. From the perspective of China's port inventory, in February 2022, the total inventory of wood pulp in the three major ports was 1.8225 million tons, up 14.62% month on month. The total inventory is at the historical position of 82.5% since 2017. The port wood pulp inventory is relatively high, which provides a cushion for the pressure of international pulp supply. We expect the short-term supply and demand to be in a tight balance. In the medium and long term, according to incomplete statistics, 13.45 million and 5.02 million tons of pulp capacity at home and abroad are expected to be put into operation in two to three years, with loose long-term supply.
Finished paper: the marginal contradiction between supply and demand is eased, and the profit is expected to improve. Marginal improvement in the supply and demand structure of finished paper since 21q4: 1) repair of overseas demand: with the slowdown of overseas epidemic, the repair of consumption demand for finished paper, the superposition of China's cost advantages and the shortage of overseas supply, China's export orders of finished paper showed a rebound trend. In December 2021, the export volume of double copper paper, white card and whiteboard reached 66300 tons and 238800 tons respectively, with a year-on-year increase of 29.7% and 41.9%; 2) Import shock weakened: the import volume of overseas finished paper fell, and the supply shock slowed down; 3) The peak season is coming to improve the demand toughness: after the impact of the double reduction policy, after nearly a year of adjustment, the short-term demand for cultural paper has a certain toughness in the peak bidding season. In the near future, the current price of pulp has been rising one after another, the cost support is superimposed, the marginal of supply and demand structure is better, the paper enterprises have a strong willingness to support the price, and price increase letters are frequently sent. We observe that the recent rise has been partially implemented, and the profitability is expected to reach the bottom and improve.
Investment suggestion: the short-term cost support and price increase can be expected, the leading profit is expected to be repaired first, the long-term demand for finished paper is stable, and the industry pattern under the dual control of energy consumption is cleared. It is suggested to pay attention to the leading enterprises [ Shandong Sun Paper Co.Ltd(002078) ] with outstanding advantages in industrial chain integration layout and manufacturing and management, and gradually digest the impact of short-term energy consumption cost Special paper leader [ Xianhe Co.Ltd(603733) ] with price increase and profit margin improvement.
Risk tips: the risk of sharp rise in raw material prices, macroeconomic fluctuations, changes in industrial policies, deviation of calculation results, and untimely update of research report use information
