Zhongjin: Plasma prices may fluctuate weakly and steadily, focusing on boosting consumption through domestic demand.

The Zhongjin report states that on April 4th, the State Council Customs Tariff Commission announced a 34% tariff on imported goods from the United States (in 2024, China imported 1.04 million tons of softwood pulp from the United States, accounting for 13%). This tariff adjustment comes during a transformation period for China's pulp and paper industry. It is estimated that by the end of 2025, China's domestic pulp capacity is expected to double compared to 2020, increasing by over 15 million tons of self-supply that will significantly reduce reliance on external procurement. Additionally, considering the current sluggish end consumer demand, it is anticipated that prices for commodity pulp may continue to weaken. Key points from Zhongjin: Industry overview - Last week, the price of white cardboard paper decreased by 26 yuan to 4,576 yuan/ton; the prices of double-coated paper and copperplate paper remained stable at 5,806 and 6,101 yuan/ton respectively. - The domestic spot prices of broadleaf pulp and softwood pulp decreased by 4 yuan and 42 yuan to 4,609 and 6,473 yuan/ton respectively, continuing to decline slightly over the past several weeks. Pulp: Weak demand is central, leading to stable pulp prices On April 4, 2025, the State Council Customs Tariff Commission announced a 34% tariff on imported goods from the United States, which accounts for 13% of China's softwood pulp imports from the United States in 2024. This tariff adjustment marks a transformation period for China's pulp and paper industry: apart from large-scale paper producers (such as Sun Paper) who early on established integrated forestry and pulp operations, Chinese paper companies (led by Xianghe and Nine Dragons in this round) began rapidly expanding their self-supply of raw materials starting from 2023 to reduce dependence on external sources and smooth out profit fluctuations. It is estimated that by the end of 2025, China's domestic wood pulp capacity is expected to double compared to 2020, with an increase of over 15 million tons of self-supply, significantly reducing reliance on external procurement. Even with the consideration of open purchases from the US, China could compensate through other regions like Canada and Northern Europe. Additionally, considering the current weak end consumer demand, it is predicted that prices for commodity pulp might continue to weaken. Paper and pulp sector: Short-term prices are expected to remain stable Art paper: Since the middle to late March, domestic downstream demand has been flat, with low customer purchase enthusiasm and slow dealer shipments leading to increased inventory pressure. Early in the first quarter, the implementation of price increases for art paper was decent (attributed to the shutdown of Morning News at the end of 2024 and the seasonal peak for the industry), and it is estimated that the profits per ton for leading art paper brands are expected to significantly recover quarter on quarter in the first quarter. April and May are traditionally peak seasons for art paper, but considering weakening cost support, it is expected that prices will remain flat in the short term. Looking at the full year perspective, art paper capacity is expected to gradually come online in the middle of the year, and there might be price pressure in the second half of the year. White cardboard paper: Recently, paper prices have fallen to historic lows, and the demand for white cardboard paper is closely related to end packaging. Current demand has not shown significant improvement, and there is an abundance of new white cardboard paper capacity. According to Zhuochuang, in March 2025, the utilization rate of white cardboard paper capacity was at 68% (compared to over 80% in the same period in 2020). White cardboard paper is currently in a weak supply-demand situation, indicating that prices might continue to fluctuate at the bottom. Corrugated cardboard: Prices have stabilized after overselling. In recent weeks, the decline in paper prices has slowed down. At current prices, Zhongjin estimates that leading companies are operating at the edge of breakeven. Considering the high stock levels at paper mills and the lack of improvement in demand, it is expected that paper prices will remain stable in the near future. However, as corrugated cardboard is a lower-end, rigid packaging product, potential consumption policy incentives in the future could lead to positive outcomes for this sector. Risk factors - Demand falling short of expectations - Excessive growth in supply - Unexpected fluctuations in core raw material prices.