In China, sluggish demand and excessive supply have weighed on prices for recycled containerboard and cartonboard again in July and forced some mills to curtail production, while producers of virgin fiber-based ivory board and fine paper have instigated hikes in a bid to halt the sharp price declines seen in recent months.
July is supposed to be the start of the traditional peak season for the packaging industry in China, with board demand usually picking up – driven by both domestic and overseas orders related to various festivals in the second half of the year.
But market participants have said that packaging demand has remained tepid or even flat so far this month, with the country’s industrial activity weakening due to contracting exports and waning retail sales growth amid a slump in the property market.
Leading recycled containerboard producers opted to consecutively cut their prices by a total of RMB 50-150 per tonne ($6.99-20.98 per tonne) to try and encourage orders. Smaller and medium-sized mills had to follow suit.
In eastern China, as of Wednesday July 26, the average price for high-strength corrugating medium was RMB 88 per tonne less than in late May. The average price for testliner fell RMB 102 per tonne this week compared to last month, while kraft-top liner’s average price moved south by RMB 116 per tonne. The average white-top liner price this week was down by RMB 100 per tonne from a month ago.
The seemingly non-stop price declines have largely prevailed in the Chinese market since business resumed after the Lunar New Year holiday in late January and sources from board mills and downstream box plants said they could not “see the end of the tunnel yet.”
Deteriorating profitability has put pressure on recycled containerboard mills, including large-scale ones, to curtail production. Some major recycled containerboard producers in China have announced downtime plans for late July and August.
Recycled fiber-based grayback coated duplex saw markdowns of around RMB 100-200 per tonne this month. The average for premium grade material declined by RMB 175 per tonne.
