Financial Associated Press, October 8 (Reporter Luo Yichen): With the start of the peak season for the papermaking industry in October, the market expects leading paper companies to perform well stimulated by consumption nodes such as Singles' Day and the Spring Festival.

Financial Associated Press reporters have learned from various sources that many paper companies hold a cautious and optimistic outlook for the Q4 market. The management of Yueyang Forest & Paper (600963.SH) stated at the earnings conference that with the arrival of the peak demand season, the price of cultural paper is expected to increase, and there is currently no sign of a reduction in the scale of publishing tenders. A leading paper packaging company representative stated that stimulated by Singles' Day promotions, it is expected that there will be a year-on-year increase in demand for paper boxes. During the same period, the management of Wuzhou Special Paper Group (605007.SH) also expressed optimism, expecting profits in the fourth quarter to rebound compared to the third quarter.

It is reported that in the first three quarters of this year, the overall situation of the papermaking industry was relatively flat, with industry profits continuously under pressure. However, thanks to the relatively stable prices of raw paper pulp, the cost control advantage of leading paper companies gradually emerged, leading to a significant recovery in profits. The widely recognized "cost control champion" Shandong Sun Paper in the first half of the year achieved a year-on-year increase of 40.49% in net profit attributable to the parent company, with gross margins for cultural paper, cardboard paper, and household paper all increasing year-on-year, significantly outperforming the industry average gross margin.

There are many factors contributing to gross profit differences. The so-called industry average gross profit is generally calculated based on the spot market prices of pulp and paper types, representing the real situation of most small and medium-sized paper mills that cannot sign long-term contracts with overseas pulp mills and have limited inventory capabilities for pulp production. They can only purchase pulp spot transactions from domestic traders, process it, and then sell it. With the lackluster demand in the first three quarters of this year, paper prices could only follow the fluctuations in raw materials, and the profit margins of small and medium-sized paper companies have been unable to expand.

However, for leading paper companies, due to long-term contracts, pulping capacity, and inventory management advantages, their costs are often lower, giving them the opportunity to obtain higher profits.

A public paper company official informed the Financial Associated Press reporters that leading paper companies have different inventory management methods, "each has its own way of management, so the profit differences are so significant, this is the core secret of paper companies." Among the main paper companies, Shandong Sun Paper and Hangzhou Huawang New Material Technology (605377.SH) have shown good cost control performance, with the former leading in scale in the industry, focusing on the early layout of the forest pulp integration model, while the latter is directly engaged in pulp trade, with better ability to cope with fluctuations in pulp prices compared to most comparable companies.

Standing at the starting point of Q4, the papermaking industry still faces considerable challenges. Data from Zhuochuang Information shows that in the just-passed third quarter, the prices of cultural paper, white cardboard paper, and packaging paper all showed a downward trend, coupled with expectations of new production capacity release, indicating significant pressure for paper price increases in Q4. Against this background, leading paper companies still need to improve profits by competing in cost control.