The packaging paper and living paper market grow steadily

The packaging paper and living paper market grow steadily

The overall operating performance of listed companies in the paper industry in China continued to decline. Of the 23 listed companies in the paper industry, as of the third quarter of 2014, there were 12 listed companies operating at a loss, and three listed companies had operating profit margins of less than 1%.

The market for commercial printing paper such as newsprint continues to shrink

With the development of information technology, especially the development of mobile information technology, the output and demand of newsprint paper and other commercial printing papers are continuously declining.

At present, China’s newsprint production accounts for 13% of the global newsprint production, ranking second in the world, second only to Canada. According to the statistics of the China Paper Association and the statistics of the General Administration of Customs, the apparent consumption of newsprint in China from January to September 2014 fell by about 14% year-on-year. US newsprint consumption has decreased cumulatively by 83% from 2008 to 2013. In October 2014, the demand for newsprint in North America fell by 13.1% from the same month of last year. The demand for newsprint for newspaper printing decreased by 17.3% year-on-year, and that of newsprint increased by 34.2%. Sweden is the world’s second largest exporter of newsprint, second only to Canada, and exports 95% of Sweden’s newsprint. According to the statistics released by the Swedish State Forestry Administration, the production of newsprint in Sweden fell by 22.6% year-on-year in 2013.

Market demand for living paper and wrapping paper rises steadily

China’s production of household paper ranks first in the world, followed by the United States. The production of household paper in China and the United States accounts for 48% of the total domestic production of paper. Contrary to the decline in the production and demand for newsprint and printing paper, the production of global household paper and packaging paper has steadily increased. According to statistics released by the Ukrainian National Statistical Commission, in 2013 Ukraine's printing paper decreased by 22.4% year-on-year, while toilet paper production increased by 5.6% year-on-year, packaging paper increased by 8.6% year-on-year, and corrugated carton carton production rose by 9.8% year-on-year. Germany, Sweden and Finland are the three largest paper-producing countries in Europe. In 2013, Germany, Sweden and Finland all reduced the production of printing paper and increased the output of packaging paper and board. In the first three quarters of 2014, Japan’s newsprint production decreased year-on-year, while sanitary paper, packaging paper and corrugated paper rose year-on-year.

At present, in the global paper product output and demand structure, household paper and corrugated board account for nearly 50% of the total, and newsprint and printed writing paper together account for about 35%. The demand for household paper and corrugated board continued to grow steadily, while newsprint and printing and writing papers continued to decline. In particular, newsprint continued to drop substantially.

China's papermaking structural overcapacity will not rule out the collapse of large-scale paper companies in the future

The development of information technology has disrupted the competitive landscape of the paper industry. Then, how should the listed companies in the paper industry respond to the drastic changes in market demand? Can newsprint giants stop falling on the downswing?

According to the 2014 half-year report of Huatai Shares, Huatai Co., Ltd. transformed two newsprint production lines into high-end cultural paper production lines and shut down several backward cultural paper production lines.

Zhongshun Jierou's main products are high-end household paper products, especially paper handkerchiefs. Faced with the dramatic changes in the market demand structure of the paper industry, listed companies in the paper industry are adjusting their product structure and flocking to household paper. The supply of household paper will grow rapidly, and there will even be a clear oversupply. Therefore, Zhongshun Jierou faced the pressure of market competition no less than Huatai shares.

In 2013, China's demand for paper and paperboard accounted for 25% of the world's total, while output accounted for 26%. In the coming years, due to the sharp drop in the demand for newsprint and printing paper, the global production of paper and board will continue to decrease. The supply and demand forces of the market will shut down some of China’s large-scale paper companies.

Before the electronic media splurring, the listed companies in the paper industry competed against which listed company had advanced imported equipment and advanced imported technology. Which listed company in the paper industry can continue to survive in the papermaking industry and cannot rely on imported equipment and imported technology. Instead, it compares which listed company can cooperate with other industry companies, and compares which listed company can be keen to discover the technological progress of other industries. The impact of the paper industry is to compare which listed company can provide customers with personalized services.

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