The Zhitong Finance App learned that Orient Securities published a research report saying that domestic waste to factory prices rose this week, and foreign waste prices were divided. The cumulative production of machine-made paper and paperboard increased 13.5% year-on-year from January to July 2024. The monthly output in July was 13.17 million tons, an increase of 11.5% year-on-year. With the centralized commissioning of new production capacity of Suzano Cerrado and Liansheng commercial pulp, the external price of pulp has gradually recovered. Recently, the price of Brazilian broadleaf pulp has been lowered by close to 100 US dollars/ton. The decline in external pulp prices has helped leading paper companies gradually release cost pressure. At the same time, considering that the current spot price of pulp is already in the stage of phased refining, compounded by downstream demand, it is expected that the prices of cultural paper and specialty paper may gradually stabilize.

The light industry index fell 2.00% this week, outperforming the market by 2.42pct; the papermaking sector fell 2.60%, outperforming the market by 3.02pct. The Shanghai and Shenzhen 300 Index rose 0.42% this week, and the Light Industry Manufacturing (Shenwan) Index fell 2.00%, outperforming the Shanghai and Shenzhen 300 Index by 2.42pct, ranking 19th out of 28 Shenwan Tier 1 industries; in the secondary sector, the papermaking sector fell 2.60%, outperforming the market by 3.02 pct. The four major light industry sectors fell by 0.86%, 2.00%, 2.73%, and 3.02%, respectively, according to their small to large declines this week, respectively.

Industrial chain data tracking

Domestic waste to factory prices rose this week; foreign waste prices diverged; spot prices of pulp diverged; prices of dissolved pulp remained stable. (1) Domestic waste to factory prices (excluding tax) rose by 13 yuan/ton this week; CIF prices at the main port of US OCC in Southeast Asia fell by 5 US dollars/ton, and European waste and daily waste prices rose 3-10 US dollars/ton; (2) Chilean hardleaf wood pulp was not quoted in August, and external prices of softwood pulp remained stable this week; the spot price of broadleaf wood pulp fell 80 yuan/ton this week, and the spot price of coniferous wood pulp rose 20 yuan/ton; in late July 2024, the total wood pulp inventory of China's two major ports was 1.57 million tons this week, up 3.0% from the previous month; (3) The price of dissolved slurry remains stable.

The price of low-grade box board remained stable this week, while the prices of the rest of the paper types fell. According to statistics from Zhuochuang News, the average market price of finished paper including tax has dropped by 48 yuan/ton, the price of coated paper dropped by 6 yuan/ton, the price of white card paper fell by 20 yuan/ton, the average factory price of high-grade box board paper fell by 20 yuan/ton, and the average price of low-grade box board paper remained stable.

The profit level of coated paper was divided this week, and the profit level of other types of paper declined. The profit level is characterized by the price difference between finished paper and raw materials. This week, the profit level of double adhesive paper decreased by 13-61 yuan/ton compared to last week; the profit level of coated paper fell by 24 yuan/ton from last week, and the profit level of small paper companies increased by 24 yuan/ton from last week; this week's profit level of white cardboard decreased by 8-29 yuan/ton from last week; this week's profit level of waste paper products decreased by 10-11 yuan/ton compared to last week.

The cumulative production of machine-made paper and paperboard increased 13.5% year-on-year from January to July 2024. (1) The cumulative production of machine-made paper and paperboard from January to July 2024 was 89.58 million tons, up 13.5% year on year; the monthly output in July was 13.17 million tons, up 11.5% year on year; (2) Excluding price factors, the inventory (estimated value) of finished products produced in the machine paper and paperboard manufacturing industry increased by 1.6% year on year, up 0.7% month on month; (3) In terms of paper and cardboard imports, the cumulative increase of 5.3% year on year from January to June 2024; in terms of export volume, the cumulative year-on-year increase of 17.3 year on year from January to June %

Investment advice and investment targets

With the centralized commissioning of new production capacity of Suzano Cerrado and Liansheng commercial pulp, the external price of pulp has gradually recovered. Recently, the price of Brazilian broadleaf pulp has been lowered by close to 100 US dollars/ton. The decline in external pulp prices has helped leading paper companies gradually release cost pressure. At the same time, considering that the current spot price of pulp is already at the stage of phased refining, the price of cultural paper and specialty paper is expected to gradually stabilize, and the price of cultural paper and specialty paper is expected to gradually stabilize. We recommend Sun Paper (002078.SZ, purchase), leading high-end decorative paper leader Huawang Technology (605377.SH, purchase), leading specialty paper company Xianhe Co., Ltd. (603733.SH, purchase), and Wuzhou Special Paper (605007.SH, increase in holdings), a leading food packaging paper segment leader. In terms of waste paper types, domestic waste prices have recently rebounded slightly, and the amount of corrugated paper imported from China has declined markedly. As the downstream enters the peak traditional consumption season in the second half of the year, the box board corrugated paper industry is expected to continue to recover. It is recommended to focus on Nine Dragons Paper (02689, unrated) and Mountain Eagle International (600567.SH, increased holdings).

Risk warning

The risk that macroeconomic growth will slow down and terminal demand will fall more than expected; the risk that new overseas projects will not advance as expected