Paper industry: international pulp price differentiation white card may increase price in May

This week (from April 23), the paper printing sector is behind the market. The sector's gains this week were 0.04%, behind the Shanghai and Shenzhen 300 Index (which rose 1.80% this week) by 1.76 percentage points. We believe that the paper sector is currently at the bottom, both in terms of fundamentals and valuations. The valuation of the sector is expected to be fixed, but the current fundamentals do not support large-scale rebound. We expect that whether demand will pick up will determine the trend of raw materials and paper prices, and it also indicates whether the sector will see a fundamental improvement in investment opportunities in the first half of the year. We believe that the increase in volume will be greater than the impact of price increases on dealer replenishment.

International pulp prices have split this week, with European softwood pulp rising by 0.3% and hardwood pulp prices falling by 0.60%. In terms of coniferous pulp, at the beginning of the week, Arauco released a May offer, which was flat at $700/ton in the previous round. In the current situation that the spot market is bleak, the price is chaotic, and the price is upside down, it is difficult to have a real order. In terms of broad-leaf pulp, according to foreign media, Fibria's May offer rose by US$30-40/ton globally, and the quotation in China has not been confirmed by domestic offices.

International waste paper prices have fallen this week. This week, although some of the US scrap futures market prices were slightly lowered, and the paper mills vigorously repaid, the real orders were still stable, and only the prices of old newspapers were weak. The recent trading in the daily waste market was light, and the trading enthusiasm of paper mills and traders was not high. The downstream bearish sentiment of European waste futures is aggravated, and some suppliers may have pressure on deposits and shipments. Paper prices are rising due to cost. In terms of double-adhesive paper, the market supply and demand was stable. Although the initial manufacturers announced price increases in April, the market demand was weak and the shipments were flat. The actual implementation capacity of the fare increase policy was limited. In terms of white cardboard, the white card traders' quotations have been generally stable this week. In May, domestic white paper mills will launch a new round of price increases. Most paper mills such as Sun and Senbo plan to increase by 200 yuan/ton. In terms of coated paper, the price of traders' shipments continued to advance this week. Due to the gradual consumption of the previous inventory, as the cost increased, the terminal price remained stable. In terms of container board, major paper mills have shouted, but the downstream acceptance is limited, mostly based on stability, and the overall domestic demand has not increased significantly.

We give the paper plate a “hold” investment rating, suggest “standard”, give the light industry sector “overweight” investment rating, and recommend down to “standard”. In terms of stock selection, we recommend: Donggang, Yongxin, Tongxing Lixing, Xinghui Car Model, Sofia.

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