Recently, leading paper manufacturers have issued a flurry of price hike notices. Quotes for white cardboard and corrugated paper have been comprehensively raised, with a single-round increase ranging from 50 to 80 RMB per ton; the industry's resolve to uphold prices is stronger than ever. This current wave of price increases is driven by the combined impact of four core factors: rigid cost escalation, supply contraction, low inventory levels, and a marginal recovery in demand. With supply-demand dynamics improving simultaneously both domestically and internationally, paper prices are entering a window of trend-based recovery.

I. May 21 Spot Market Performance: Price Support Takes Effect, Spot Prices Follow Suit Steadily

Today, domestic spot prices for white cardboard and corrugated paper remained stable with an upward bias. Paper mills maintained firm quotes, while traders followed suit with price increases, shifting the center of transaction prices upward.

Corrugated Base Paper: The SunSirs benchmark price stood at 2,812 RMB/ton—up 0.29% for the day and 3.31% compared to the beginning of the month. Mainstream quotes ranged from 2,780 to 2,850 RMB/ton, while high-end 120g AA-grade stock traded between 2,840 and 2,880 RMB/ton.

White Cardboard: Mainstream transaction prices ranged from 3,950 to 4,050 RMB/ton, with high-end food-grade cardboard trading between 4,200 and 4,300 RMB/ton. Prices rose by 50 to 80 RMB/ton week-on-week, and traders showed reduced willingness to offload inventory at low prices.

The market currently exhibits the following characteristics: "factory prices leading the rise, spot prices following suit, and restocking driven by rigid demand." Downstream wait-and-see sentiment has eased, leading to an increase in small-batch restocking activities.

II. Domestic and International Capacity and Output: Domestic Supply Contracts, Overseas Capacity Undergoes Rationalization

(I) Domestic Capacity and Output

White Cardboard: Total capacity is projected to reach approximately 13.8 million tons by 2026, with no new capacity additions planned for standard white cardboard. In May, the operating rate stood at 82%, yielding a monthly output of approximately 1.05 million tons—flat year-on-year and down slightly month-on-month. Corrugated Paper: Total production capacity stands at 33.2 million tons; net capacity additions have been limited in recent years, while the elimination of outdated capacity continues to advance. In May, the operating rate was 78%, with a monthly output of approximately 2.1 million tons—a 3.2% month-on-month decrease—reflecting an increase in maintenance shutdowns among small and medium-sized mills.

(II) Overseas Capacity and Supply

Global packaging paper capacity continues to contract, as numerous paper companies in Europe and North America have shut down inefficient production lines. Cardboard capacity has also been reduced in countries such as Finland, resulting in a tightening of international spot market supply. Meanwhile, capacity growth in Southeast Asia remains limited, and its export competitiveness has weakened, thereby slowing the impact of imports on the domestic market.

III. April Import and Export Data: Exports Rebound, Import Dependence Declines

According to customs data, the paper industry's import and export landscape in April was characterized by "rising exports and falling imports":

White Cardboard: Imports totaled 32,000 tons, down 12.3% year-on-year; exports totaled 115,000 tons, up 8.7% year-on-year. The export ratio rose to 24.6%, demonstrating the resilience of overseas demand.

Corrugated Paper: Imports totaled 228,000 tons, down 8.5% year-on-year; exports totaled 5,000 tons, up 25% year-on-year. Import dependence fell to 14%, indicating an improvement in domestic self-sufficiency.

For the cumulative period from January to April, white cardboard exports grew by 7.2% year-on-year, while corrugated paper imports declined by 6.1% year-on-year, reflecting an optimization of the domestic and international supply-demand landscape.

IV. Current Inventory Levels: Low Inventory Supports Upward Price Movement

Corrugated Paper: Inventory held by sampled enterprises stood at 321,400 tons, down 4.12% from the end of April. Social inventory (market-wide stock) totaled 990,000 tons—marking a three-year low—as the trend of inventory reduction continues.

White Cardboard: Enterprise inventory stood at 896,000 tons, down 5.3% month-on-month. Inventory levels among traders remain generally low, creating rigid demand for restocking; consequently, inventory levels are providing strong support for upward price movements. V. Core Factors Behind Price Increases: A Confluence of Domestic and International Drivers

(I) Domestic Factors

Rigid Cost Escalation: Prices for wood pulp—the core raw material for white cardboard—are fluctuating at high levels; the benchmark price for hardwood pulp stands at 4,593 RMB/ton, while softwood pulp is at 5,100 RMB/ton. Meanwhile, prices for waste paper—the raw material for corrugated paper—have risen, with the average price for waste yellow cardboard reaching 1,658 RMB/ton (up 3.56% from late April); energy and logistics costs have also trended upward in tandem.

Intensified Supply Contraction: The industry has entered a cycle of capacity contraction. Small and medium-sized mills are undertaking increased maintenance shutdowns due to financial losses, while leading paper manufacturers demonstrate a strong resolve to defend price levels by actively controlling output volume to stabilize prices, resulting in a reduction of market-circulating inventory.

Low Inventory Levels Supported by Inelastic Demand: Both corporate and aggregate social inventories remain at low levels. Downstream packaging and printing sectors exhibit stable, inelastic demand; consequently, restocking demand has been unleashed, leading to an widening gap between supply and demand.

Imperative for Profit Recovery: Following a prolonged period of sluggish paper prices that placed significant pressure on industry gross margins, leading enterprises are now seeking to restore profitability through price hikes, thereby highlighting their advantage in pricing power.

(II) International Factors

Contraction in Overseas Supply: Paper manufacturers in Europe and North America have reduced production and undergone capacity rationalization. This has resulted in a tightening of the global supply of packaging paper; consequently, rising prices in international markets are driving an upward trend in domestic paper prices.

Revival in Export Demand: Driven by a recovery in overseas economies—particularly the packaging and food sectors—demand has surged. This has bolstered the export competitiveness of China's white cardboard and corrugated paper products, leading to an increase in export orders.

Support from Exchange Rates and Logistics: The RMB exchange rate remains stable, while international shipping and logistics costs have retreated. These factors have improved export profit margins, thereby boosting the enthusiasm of enterprises to increase their export shipments.

VI. Upstream and Downstream Benchmark Prices and Sales Performance: Firm Costs and Stable Downstream Demand

(I) Upstream Products

Wood Pulp: Softwood pulp is priced at 5,100 RMB/ton and hardwood pulp at 4,593 RMB/ton. Prices have stabilized at lower levels, trading volume remains moderate, and cost-side support remains solid.

Waste Paper: Waste yellow cardboard is priced at 1,658 RMB/ton. Prices continue to trend upward, driven by active purchasing from paper mills amidst a tightening supply situation. (II) Downstream Products

Packaging Printing: Quotes for corrugated cartons and paper boxes remain stable; orders are driven primarily by essential demand, with limited acceptance of higher prices and a prevalence of small-batch purchasing.

Food and Pharmaceutical Packaging: Demand for white cardboard remains robust; trading activity for high-end food-grade and pharmaceutical-grade cardstock is brisk, and price transmission from upstream to downstream is proceeding smoothly.

Overall, the transmission of prices between upstream and downstream sectors is fluid. Upstream costs remain firm, while downstream demand—driven by essential needs—remains steady, thereby creating a favorable environment for rising paper prices.

VII. Future Outlook: The pricing power of leading enterprises is becoming increasingly consolidated, establishing a clear upward trend over the medium term. In the short term, however, the market is expected to experience high-level volatility; as the pace of downstream inventory replenishment slows, the magnitude of price increases may narrow, with market movements characterized primarily by fluctuations within a high-price range.

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