Paper price rally to extend into 2017 amid limited capacity and surging costs
Nine Dragons Paper, the largest packaging manufacturer, will raise the price of its line-board products at least one more time in the first half of 2017, after in February lifting the unit price, by 100-200 yuan per tonne
The high price of paper in China is yet to peak with demand still outstripping capacity, as manufacturers are being left with one a fundamental business problem – how to pass on those raised upstream costs to their downstream users.
Indonesia-based Asia Pulp and Paper Group raised its prices of art paper by 300-400 yuan (US$75-58) per tonne on February 17, Shanghai-listed Yueyang Forest and Paper increased its prices for offset paper by 500 yuan per tonne on February 18, Sun Paper hiked its costs on all its copy paper by 300 yuan per tonne on February 22 and Asia Symbol lifted its prices of electrostatic copy paper by 300 yuan per tone, according to a research report by thinktank China International Capital Corporation.
The prices of main raw materials, mainly recycled paper and coal, have been rising since last year, forcing paper manufacturers to raise their own prices and pass cost down the industry chain.
Nine Dragons Paper, China’s largest packaging paper manufacturers, will raise the price of its line-board products at least one more time in the first half of 2017, after in February lifting the unit price, by 100-200 yuan per tonne, chairwoman Cheung Yan told reporters after announcing its interim results.
UBS analysts Edwin Chen and Felix Liu said in a research report they expect Nine Dragons’ fundamentals to further improve “as we view its industry supply demand improvement as structurally sound”.