According to the report published by Oriental Securities on the Intelligence Finance app, the factory price of domestic waste increased this week, while the price of foreign waste showed differentiation. The cumulative output of paper and paperboard from January to July 2024 increased by 13.5% YoY, with a monthly output of 13.17 million tons in July, an increase of 11.5% YoY. With the centralized operation of Suzano Cerrado and Liansheng commodity pulp new production capacity, the offshore quotation of pulp gradually fell back. The recent quotation of offshore broadleaf pulp in Brazil decreased by nearly $100 per tonne, which is helpful for the leading paper enterprises to gradually release cost pressure. At the same time, considering that the current spot price of pulp has reached a phase of grinding bottom, and with the downstream demand gradually turning into the traditional peak season, it is expected that the prices of cultural paper and special paper will gradually stabilize.

The index of light industry manufacturing fell by 2.00% this week, 2.42% below the large cap index; the subsector of papermaking fell by 2.60% this week, 3.02% below the large cap index. The CSI 300 index rose by 0.42% this week, and the light industry manufacturing (Shenwan) index fell by 2.00%, 2.42% below the CSI 300 index, ranking 19th among the 28 Shenwan primary industries; among the secondary industries, the papermaking subsector fell by 2.60%, 3.02% below the large cap index. This week, the four major sub-sectors of light industry ranked from small to large decline as entertainment supplies, packaging and printing, furniture, and papermaking, with declines of 0.86%, 2.00%, 2.73%, and 3.02%, respectively.

Tracking industry chain data.

This week, the factory price of domestic waste has increased, and the price of foreign waste has differentiated. The spot price of pulp has differentiated, and the price of dissolving pulp has stabilized. (1) This week, the factory price (excluding tax) of domestic waste increased by 13 yuan/tonne. The CIF price of OCC, a waste paper in Southeast Asia, fell by 5 US dollars/tonne, while the prices of European and Japanese waste paper rose by 3-10 US dollars/tonne. (2) Chilean broadleaf pulp has not quoted temporarily in August, and the offshore quotation of softwood pulp stabilizes this week. The spot prices of broadleaf pulp and softwood pulp fell by 80 yuan/tonne and rose by 20 yuan/tonne respectively this week. The total inventory of wood pulp in two major ports in China in late July 2024 was 1.57 million tons, up 3.0% MoM. (3) The price of dissolving pulp has stabilized this week.

This week, the price of low-grade carton board paper remained stable, while the prices of other paper types declined. According to the average market price of finished paper with tax counted by Zhuochuang Information, the price of double adhesive paper decreased by 48 yuan/tonne this week, the price of copperplate paper decreased by 6 yuan/tonne, the price of white card paper decreased by 20 yuan/tonne, the average factory price of high-grade corrugated board paper decreased by 20 yuan/tonne, and the factory price of low-grade corrugated board paper remained stable.

This week, the profit level of copperplate paper is polarized, and the profit level of other paper types has declined. Represented by the price difference between finished paper and raw materials, the profit level of double adhesive paper has decreased by 13-61 yuan/tonne from the previous week; the profit level of copperplate paper has polarized, with the profit level of large paper enterprises decreasing by 24 yuan/tonne from the previous week, and that of small paper enterprises increasing by 24 yuan/tonne from the previous week; the profit level of white card paper has decreased by 8-29 yuan/tonne from the previous week; the profit level of waste paper-based paper types has decreased by 10-11 yuan/tonne from the previous week.

The cumulative output of paper and paperboard from January to July 2024 increased by 13.5% YoY. (1) The cumulative output of paper and paperboard from January to July 2024 was 89.58 million tons, an increase of 13.5% YoY; the monthly output in July was 13.17 million tons, up 11.5% YoY. (2) After excluding the influence of price factors, the inventory of finished products in the paper and paperboard manufacturing industry in June 2024 increased by 1.6% YoY and 0.7% MoM. (3) In terms of the import and export of paper and paperboard, the import volume increased by 5.3% YoY from January to June 2024, and the export volume increased by 17.3% YoY in the same period.

Investment recommendations and targets.

With the centralized operation of Suzano Cerrado and Liansheng commodity pulp new production capacity, the offshore quotation of pulp gradually fell back. The recent quotation of offshore broadleaf pulp in Brazil decreased by nearly $100 per tonne, which is helpful for the leading paper enterprises to gradually release cost pressure. At the same time, considering that the current spot price of pulp has reached a phase of grinding bottom, and with the downstream demand gradually turning into the traditional peak season, it is expected that the prices of cultural paper and special paper will gradually stabilize. It is recommended to buy Sun Paper, a leading integrated company of forest and papermaking industry; Huawang Technology, a leading company of high-end decorative base paper; Xianhe, the leader in special paper; and Wuzhou Special Paper, a leading company in food packaging paper. In terms of waste paper-based paper types, the recent domestic waste prices have slightly rebounded, and China's import of corrugated paper has significantly reduced. With the downstream turning into the traditional consumption peak season in the second half of the year, the corrugated board paper industry is expected to continue to recover. We recommend paying attention to ND Paper, a leader in the forest-pulp-paperboard industry (02689, unrated), and Shanying International Holdings (600567.SH, shareholding).

Risk warning

Risks of macroeconomic slowdown and terminal demand declining more than expected; risks of overseas new projects not meeting expectations.