In 2017, price increases were a headache for the paper industry. After saying goodbye to winter and expecting spring, little did they know it would be a 'late spring cold snap'. 'Speculating in housing or stocks is not as good as speculating in paper' is no longer a joke; over the past year, paper prices have been soaring for almost a year. The surge in packaging paper prices dominated headlines for a year without stopping, and now tissue paper is facing a new wave of price increases. Xie Shiping, Secretary-General of the Paper Industry Association, stated that the main raw materials for toilet paper are long-fiber and short-fiber pulp. According to North American long-fiber pulp prices, it was $630 per ton in January 2017 and rose to $920 per ton in January 2018. Short-fiber pulp also increased from $545 to $805 per ton. In other words, long-fiber and short-fiber pulp have risen by 46% and 47% respectively over the past year. Latest price increases for tissue paper:

  • Sun Paper tissue base paper increased by 200 yuan/ton
  • YFY all base paper increased by 200 yuan/ton
  • Henglian Meilin tissue paper increased by 200 yuan/ton
  • Huajin Group tissue paper increased by 200 yuan/ton
  • Guangxi Rongxing Zhongke increased by 200 yuan/ton
  • Yinge Group tissue paper increased by 100 yuan/ton Reasons influencing and driving tissue paper price increases in 2018:
  1. Good macroeconomic performance In 2017, the annual GDP reached 82.7122 trillion yuan, an increase of 6.9% over the previous year based on comparable prices, marking the first annual GDP growth rate increase in 7 years. Current macroeconomic data indicate a favorable economic environment, conducive to stable market development. In December, China's industrial value-added output for enterprises above designated size grew by 6.2% year-on-year, exceeding the expected 6.1%. 2018 is the first year of the 19th National Congress of the Communist Party of China. The country will continue to adhere to the general principle of seeking progress while maintaining stability, maintain proactive and prudent fiscal policies, and promote sustained economic development. The production and sales of the paper industry will also be driven.
  2. Rising demand for tissue paper itself China's tissue paper production ranks first globally, followed by the United States. Together, China and the U.S. account for 48% of global tissue paper production. Contrary to the decline in newsprint and printing paper production and demand, global tissue paper and packaging paper production has been steadily rising. From the perspective of the demand structure of the tissue paper market, China's tissue paper products are still mainly toilet paper, but its share has been decreasing year by year, from 62% in 2012 to 56.3% in 2016. The proportion of high-end tissue paper products such as facial tissues, napkins, and kitchen paper has been on the rise, gradually replacing the share of toilet paper. Data show that from 2010 to 2016, the compound growth rates of handkerchief paper, napkins, kitchen paper, facial tissues, and hand towels were 9.8%, 15.5%, 8%, 15.9%, and 23.1%, respectively.
  3. International commodity pulp prices soared in 2017, increasing cost pressure on producers In 2017, wood pulp prices accumulated an increase of 68% to 98%. Currently, spot wood pulp prices are stable with slight adjustments, but in the long run, wood pulp prices will continue to rise. From 2018 to 2020, there will be no new pulp capacity released, and pulp mill operating rates will be as high as 97%, leading to unprecedented tightness in pulp supply. Since the fourth quarter of 2016, international commodity pulp has experienced a continuous upward trend lasting over a year, especially in the fourth quarter of 2017, when the price increase was rare in recent years. By the end of December 2017, long-fiber pulp prices in the Asian market had reached $910 per ton, and short-fiber pulp prices were close to $800 per ton, both hitting recent highs. This has brought enormous cost pressure to paper manufacturers that rely on imported pulp raw materials.
  4. Environmental protection policies implemented in 2018 Many regions have launched major environmental protection campaigns, and problematic paper enterprises have faced penalties such as production suspensions and fines. The enforcement of environmental policies has not relaxed at all. 2016 was the first year of environmental protection policies, 2017 was the year of their outbreak, and 2018 will be the year of their implementation. In the new year, environmental protection will be enforced according to increasingly strict regulations. Small and medium-sized paper enterprises that cannot meet environmental standards may not survive 2018. A source from a tissue paper factory revealed that due to the continuous rise in raw material prices, the company's production costs have increased significantly, and they can only maintain operations by raising prices. Moreover, due to the increasing scarcity of wood, the concentration of international wood pulp supply has been increasing in recent years, and limited raw material supply has further enhanced enterprises' bargaining power. In addition, it is worth noting that April 1 is the first tax collection period for China's environmental protection tax. This factor will increase paper mill costs in the short term, and the resulting differences in product prices and production scales will further intensify the oligopoly pattern: large paper mills will benefit, while small mills will be gradually phased out. Price adjustments have not yet affected terminal sales Journalists found that due to rising papermaking costs, toilet paper manufacturers have indeed adjusted prices, but this has not yet passed through to terminal retail outlets. Currently, major supermarkets in the city have sufficient supplies of household paper products, prices are stable, and various promotional activities continue. In supermarkets such as Chaoshifa, Wumart, and Yonghui, there are ample stocks of toilet paper, napkins, and kitchen paper from various brands, and there has been no situation of customers making concentrated purchases. A staff member at Yonghui Supermarket said that recently, toilet paper prices in the supermarket have not fluctuated, and some paper products are even on promotional prices. Journalists checked Wumart Supermarket's shopping records through the Duodian APP and found that compared to a month ago, some paper product prices have even slightly decreased. Journalists learned from some toilet paper mills that since the beginning of this year, brands such as Breeze and Vinda have adjusted prices several times, with an increase of about 5% compared to before the Chinese New Year. Since the price adjustment notices are issued by manufacturers to wholesalers, it takes time for the adjustment to pass from wholesalers to terminals, and many supermarkets have sufficient inventory, so toilet paper prices on the market are currently relatively stable. This round of toilet paper price increases is mainly due to rising production costs, with raw material price increases being the main driver. Journalists checked the material composition of various brands of toilet paper and found that, except for a few brands made from bamboo pulp or wheat straw, most toilet paper is mainly made from virgin wood pulp or natural wood pulp. A sales manager at a large tissue paper company told reporters that short-fiber wood pulp and long-fiber wood pulp are both raw materials for producing toilet paper, and they are mixed in a certain proportion to make toilet paper. Domestic wood resources are mainly short-fiber, while long-fiber wood pulp comes from perennial trees and is mainly imported from Russia, Northern Europe, and other regions. Recently, international wood pulp prices have been rising, and the price of international long-fiber wood pulp has reached $932.5 per ton, a six-and-a-half-year high. "Since the end of 2016, toilet paper production costs have been rising, but brand manufacturers have not adjusted prices as frequently because within a certain range, the increased costs can be absorbed internally." It is understood that the domestic toilet paper market is highly competitive, with ample supply from first-tier to third-tier brands, giving consumers plenty of choices, which will also curb the extent of retail price increases. With the first spring thunder, everything begins to 'rise'. The wind has moved, the thunder is loud, and the rain is heavy. The weather is changeable. Will the paper industry face a storm of price increases? Who can provide you with a warm coat? The wave of price increases in the paper industry is fierce. Are you really ready? What do you think, dear readers? This article is compiled and edited by . -END-