International pulp prices report that domestic demand has not improved

This week, the paper printing sector is behind the market. The sector's decline this week was 3.12%, behind the Shanghai and Shenzhen 300 Index (down 0.03% this week) by 3.09 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 demand is the key to the improvement of the industry's profitability. The current sluggish demand caused by the economic downturn has affected the rise of paper prices, and the industry's profitability will remain at a low level in the short term.

International pulp prices were stable this week, European softwood pulp was basically flat, with a rise of 1.81%, while broadleaf pulp prices rose by 2.66%. In terms of coniferous pulp, various brands have been released or adjusted for May. There is no new quotation for the broadleaf pulp this week. The end user side reported that the price of Indonesian Acacia orders was US$620/ton. According to PPPC data, the global producers' wood pulp inventory days are 32 days (29 days for softwood pulp and 35 days for hardwood pulp), which is one day higher than that in March, but one day lower than the same period last year.

International waste paper prices are stable this week. This week, the overall trading atmosphere of the US waste futures market remained sluggish, and some downstream companies still held a bearish attitude, and few orders were received. As the buyers and sellers of the daily scrap futures market continue to stalemate, although some quotations reveal signs of the upswing, but lack of real support, sporadic transactions are still stable. There are still differences between buyers and sellers in the European waste futures market. Most of the downstream are not taking orders at present. The overall transaction volume this week is still very small.

The price of paper products is stable. In terms of double-adhesive paper, downstream demand is becoming lighter, and the price of traders in southern China is loosening, and the East China region is also slightly plunging. In terms of white cardboard, although the current demand for several major white paper mills has persisted, the downstream demand has not improved, and even further declined. In terms of coated paper, the printing factories in various places were underemployed, and the downstream demand was generally bleak. After the price in South China was first loosened, the terminal transaction price in East China also fell, and the markets in other regions could not escape. In terms of boxboard paper, all local markets have been in a state of desertedness, and all markets are moving in the downward channel.

We give the paper plate a “hold” investment rating, suggest “standard”, give the light industry sector “overweight” investment rating, and recommend down to “standard”.

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