In late July, China’s paper packaging industry witnessed a new round of price hike notices. Leading paper manufacturers and key production bases announced that starting August 1, the ex-factory prices of corrugated paper and recycled kraft paper will increase by ¥30 per ton.

This marks the fourth round of price hikes initiated in July alone. Over the past three weeks, industry giants like Nine Dragons Paper have repeatedly adjusted their prices across various paper categories, each time raising prices by ¥30 per ton. However, implementation has varied by region.

According to Li Li, a corrugated paper industry analyst, the price surge is largely driven by escalating raw material costs. The supply of waste paper continues to tighten while prices rise, significantly increasing cost pressures on manufacturers. In response, companies are raising prices to maintain operations.

As of July 21, the average market price of waste yellow board paper in China reached ¥1,475/ton, up ¥15 from the end of June. The price increase is attributed to limited supply and frequent rainfall in July, which has disrupted waste paper collection in some regions.

Liu Jian, a waste paper analyst, noted that top paper mills have steadily raised purchase prices, boosting market sentiment. This also provides some cost support for the finished paper price increases. Meanwhile, small- and medium-sized paper mills have begun to follow suit, and low raw paper inventories at downstream packaging plants have triggered restocking activity.

Industry experts view this round of price hikes as a strategic "pushback" against the prolonged price slump throughout the first half of 2024.

Data shows that in H1 2024, the average price of corrugated paper stood at ¥2,682/ton (down 2.44% YoY), and kraft linerboard at ¥3,616/ton (down 3.42% YoY). Gross margins also declined: corrugated paper fell to 9.97%, and linerboard to 18.96%.

Looking ahead, analysts expect a "short-term rebound followed by stabilization" in the packaging paper market. However, the recovery is unlikely to fully offset the losses from the first half of the year, and profit margins will remain under pressure due to continued cost challenges.