Multiple paper manufacturers have recently implemented coordinated price increases for white kraft paper products. Sun Paper and Wuzhou Special Paper both plan to raise prices for their white kraft paper products by CNY300 per tonne effective 5th March, based on current rates. Data indicates the white kraft paper market has remained relatively stable this year, with current market prices in Shandong province hovering around CNY7,200-7,400 per tonne. Industry insiders suggest that following the Lantern Festival, supply and demand dynamics in the kraft paper market are gradually normalising, with prices expected to rise steadily.

Early 2026 has seen strong price-supporting intentions within the paper industry, with leading manufacturers leveraging ‘multiple price hikes per letter’ to reinforce market expectations.

Undercurrents in pulp pricing

Pulp constitutes the primary raw material for paper production, accounting for 60%-70% of manufacturing costs. Since 2026, subtle shifts have emerged within the pulp market.

Although January data indicates imported bleached softwood pulp spot prices averaged CNY5,509 per tonne—a 1.2% month-on-month decline— European pulp and paper giants are intensively implementing a new round of price hikes, aiming to push bleached eucalyptus kraft pulp and northern bleached softwood kraft pulp to record highs.

Hardwood pulp suppliers are adopting an exceptionally firm stance. Most producers are currently insisting on a gross price target of US$1,250 per tonne, explicitly stating: If a $120/tonne increase is not accepted, then the opportunity should be left to others."

More critically, global supply chains are facing a series of disruptions. Spain's pulp giant Ence saw its 685,000-tonne-per-year Navia mill hit by a week-long strike over redundancy disputes. This was followed by severe storms severely damaging port logistics and shipping systems in Portugal and Spain.

In Asia, the Indonesian government abruptly revoked permits for 22 forestry companies, affecting approximately one million hectares of plantations. Industry leader Asia Pacific Resources promptly announced a 150,000-tonne reduction in hardwood pulp production for the first quarter.

Consequently, despite structural overcapacity in the pulp sector over the long term, short-term supply constraints have emerged.

Since early 2026, overseas pulp producers have persistently raised broadleaf pulp quotations. Considering shipping lead times, these price increases are expected to impact the domestic spot market after March.

Dual-track expansion and technological upgrades

While paper manufacturers focus on price hikes, another transformation is quietly underway—simultaneous advances in capacity expansion and technological modernisation.

In the tissue paper sector, Wuzhou Special Paper and Hubei Jinboshi are accelerating their strategic deployments. Wuzhou Special Paper plans to add 50,000 tonnes/year of capacity, while Hubei Jinboshi is making a significant investment, proposing to increase its high-end tissue paper production by 60,000 tonnes/year. The high-value-added products manufactured at Wuzhou Special Paper's Hubei base are highly favoured in sectors such as label backing paper, food packaging, and medical packaging.

New Developments on the Demand Side

Traditionally, the period from the Spring Festival to the Lantern Festival is referred to within the industry as the ‘mini spring’. During this time, downstream printing and packaging enterprises gradually resume operations, marking the peak season for stockpiling cultural and packaging paper, with order volumes showing a significant month-on-month increase.

Rigid demand from the textbook bidding season provides a floor for cultural paper orders, while the normalised development of e-commerce logistics injects stable incremental growth into packaging paper. Data indicates that China's express parcel volume will exceed 150 billion pieces by 2025, directly driving corrugated paper demand beyond 9 million tonnes.

However, the true growth drivers may emerge from emerging sectors. As global plastic bans advance, paper packaging's substitution potential for plastic is expanding beyond food delivery into broader industrial product packaging. Concurrently, high-value-added products like new energy battery separator paper, medical specialty paper, and semiconductor packaging paper are carving out a ‘second growth curve’ for the paper industry. Though currently representing a limited share, these specialty papers symbolise the sector's path towards transcending cyclical constraints. Their profit margins significantly exceed those of ordinary paper, and they demonstrate greater resilience to price fluctuations.

Another factor that cannot be overlooked is consumption upgrading. Generation Z consumers are willing to pay more for environmentally certified, design-oriented paper products. Sales of handbooks, art papers, and handwritten greeting cards have surged, with holiday season increases reaching 28%. Even ‘plantable seed paper’ has become a viral hit on social media platforms.

These shifts signal a profound transformation in the paper industry's demand structure. While demand for traditional office and cultural papers declines, packaging paper, specialty paper, and premium household paper are experiencing rapid growth.

The Cost-Profit Dilemma

For paper manufacturers, this wave of price hikes represents a survival-critical battle for profit restoration.

Looking back at 2025, the industry faced overall profitability pressures, with the paper manufacturing producer price index remaining in negative territory. The cultural paper sector bore the brunt: although new capacity for double-coated paper reached 1.55 million tonnes, capacity utilisation rates fell below 55% due to shrinking educational supplement orders and the impact of paperless offices, plunging the industry into

Looking back at 2025, the industry faced overall profitability pressures, with the paper manufacturing producer price index remaining in negative territory. The cultural paper sector bore the brunt of this trend. Although new capacity additions for coated paper reached 1.55 million tons for the year, capacity utilization rates fell below 55% due to shrinking educational supplement orders and the impact of paperless offices. The industry became mired in a situation where increased output did not translate to increased profits.

The packaging paper sector remained relatively stable, yet competition intensified. Corrugated paperboard output reached 31.45 million tons in 2025, with capacity utilization rebounding to 65.5%. However, the path to price recovery proved bumpy.

Under these circumstances, price hikes became the sole option for companies to “save themselves.” Yet whether these increases could be implemented—and by how much—remained uncertain.

In the short term, the depth and duration of this price hike wave depend on the combined intensity of multiple factors:

Long-term, the paper industry is undergoing profound structural transformation.

Environmental barriers are rising sharply. Both the EU and China have introduced mandatory recycling standards, imposing environmental taxes on non-compliant paper products. The application rate of recyclable and biodegradable paper has surged to 28%. Companies failing to keep pace with the green transition will be eliminated.

Industry concentration continues to rise. Global giants like APP and UPM dominate the high-end market, while domestic players such as Chenming and Sun Paper leverage technological and capacity advantages to expand their market share in premium packaging and specialty papers, squeezing smaller manufacturers out of the market.

By 2026, the paper industry will not be a “sunset industry,” but rather a year of differentiation where “the good get better and the poor get eliminated.” Driven by cost advantages, demand recovery, environmental regulations, and consumption upgrades, high-end, eco-friendly, and functional paper products will be the most promising sector to watch this year.

As an integrated internet platform providing benchmark prices, on March 4, the benchmark price of SunSirs hardwood pulp was RMB 4,600.00/ton, a decrease of 0.36% compared with the beginning of the month (RMB 4,616.67/ton).

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