The dependence of small and medium-sized paper mills may reduce the optimism of the imported waste paper market.

Looking ahead: Looking forward to 2016, PaperLink believes that the imported waste paper market is not optimistic, and prices are still dominated by low levels. China's economic growth is facing downward pressure. The situation in various industries is not very optimistic. The export volume is shrinking and the required packaging is reduced. Due to price and fiber considerations, imported waste paper is mainly used to produce high-quality packaging paper (used for export packaging). Therefore, in terms of demand, some domestic paper mills, especially small and medium-sized paper mills, may be less dependent on imported waste paper.

In 2015, the domestic waste paper recycling volume decreased slightly from the same period of last year. Since 2015, Paperlink has officially released the national waste recycling data. According to the statistics of Paper Industry News, from January to November 2015, the total amount of domestic waste paper recycling was about 48.828 million tons, including about 43.154 million tons of cardboard and cardboard, about 1.789 million tons of used newspapers, and 3.886 million tons of waste in other countries. Other wastes include waste paper, waste book paper and other types of waste paper except cardboard and old newspapers.

Compared with the same period in 2014, the national waste recycling volume decreased by about 4% from January to November 2015. The overall decline in waste recycling and the reduction in waste paper consumption are complementary. In addition, imported waste paper showed significant growth in 2015, which also affected the demand and recycling of national waste to a certain extent.

Among all types of waste paper, the recycling volume of used newspapers fell by a large margin. The root cause of the reduction in the recycling of old newspapers is the decline in the circulation of newspapers. According to the "Media Blue Book: China Media Industry Development Report (2015)" released by Tsinghua University, the circulation of newspapers is experiencing a "bridal" decline. According to statistics, the amount of paper used for printing in national newspapers in 2014 was about 2.7 million tons, a decrease of nearly 25% from 2013.

The decline in the circulation of newspapers directly caused two consequences. On the one hand, the amount of old newspapers fell, and the amount of recycling in the society was significantly reduced. On the other hand, newsprint mills’ orders were reduced, and newsprint mills were underemployed, and the demand for old newspapers Weakened.

According to RISI, the US Waste Paper Association is discussing the US waste standard adjustment program. According to this adjustment plan, the US waste ONP level will basically be canceled. According to this trend, the level of domestic waste newspapers is likely to disappear in the next few years.

In 2015, the annual recycling of national waste cardboard boxes, old newspapers and other national wastes showed a year-on-year decline, but the monthly recycling fluctuations have their own characteristics. The monthly recycling of waste cardboard and cardboard in China is relatively stable. According to paper industry news, the recycling rate of national waste carton board has reached a fairly high level, and the recycling system is quite mature. It is unlikely that the recovery rate will continue to increase in the short term. This means that there is no significant increase in the recovery of cartonboard in the absence of significant increases in the consumption of packaging cartons. At the same time, the space for recycling cardboard boxes is also very small. This is because the domestic OCC rigid demand is huge, and most of the small and medium-sized paper mills are mainly based on purchasing waste. At present, the supply and demand of waste cardboard boxes in China is basically in a relatively balanced state.

Different from cartonboard, the monthly recycling of waste newspapers in China is more volatile, and it will continue to rise from the first half of 2015 to the second half of the year. The reasons for this are as follows: First, there are more holidays in the second half of the year, and the peak season of holiday consumption is likely to drive the short-term increase in the circulation of newspapers. In addition, before the end of the year, all schools and government agencies will sort out the waste of books and newspapers, which is also the recycling of old newspapers. Brought a partial increment. Relatively speaking, the recycling amount of waste in other countries is relatively stable, and the monthly fluctuation is not large.

Responding to the decline in recycling, the domestic waste paper prices in 2015 are also in a downturn. Taking the cardboard box A grade as an example, the average domestic price at the end of December 2015 was 1,170 yuan / ton, down 9% from the same period in 2014.

In the national waste market, the paper mill as a buyer has the right to speak on the price. For the sake of self-interest, in the case of a downturn in the downstream finished paper market, paper mills naturally strive to lower the purchase price of raw materials and significantly reduce costs.

In the winter of the industry, the national waste packaging plants and suppliers have a small profit or even a loss, and they are seeking transformation. Some well-funded suppliers gradually assume the role of paid financing in the industry. They no longer operate specific waste paper recycling and packaging business, but pay small-scale packaging plants to buy goods, and then sell them to paper mills to accept drafts, through scale effect. Profits such as tax incentives.

In 2015, the volume of imported waste paper arrived in Hong Kong increased year-on-year. The overall performance of the imported waste paper market in 2015 was not satisfactory. Although the volume of arrivals in Hong Kong increased year-on-year, the price remained sluggish. According to customs data, from January to November 2015, the total amount of imported waste paper in China was about 26.515 million tons, an increase of about 6.2% compared with the same period of the previous year. The import volume of OCC is about 1.507 million tons, an increase of about 6.9% year-on-year; the import of high-grade waste paper is about 773,000 tons, an increase of about 24%; the import of old newspapers and old magazine paper is about 5.272 million tons, a year-on-year increase. About 3.8%; the import volume of mixed waste paper was about 5.373 million tons, an increase of about 4.7%.

From the year-end market transactions, the year-on-year growth of waste paper imports in 2015 is a foregone conclusion.

The United States remains the main source of waste paper imported from China. According to China Customs statistics, from January to November 2015, China imported about 11.72 million tons of waste paper from the United States, accounting for 44% of the total imported waste paper. In recent years, the volume of imports has not changed much, and the high-quality fiber strength has made domestic paper mills prefer to choose US waste.

Since 2012, China’s imports of Japanese waste have been declining year by year. According to customs data, it fell by 6.5% year-on-year in 2013 and 15.4% year-on-year in 2014. According to analysis, the main reason is that China's imported waste paper prices are low, and Japanese suppliers are more willing to shift their exports to South Korea, Thailand, Vietnam and other places, instead of relying solely on the Chinese market.

Relatively speaking, the supply of waste paper in the UK is relatively stable, but domestic buyers are more concentrated in several large paper mills. Due to its substitutability with national waste, there are currently very few small and medium-sized paper mill buyers, and more have turned to the national waste.

In recent years, the industry generally believes that “the amount of imported waste paper is gradually decreasing and the amount of waste consumed by the country is increasing” is the main trend of structural changes in waste paper raw materials in China. However, as can be seen from the actual data in 2015, the demand for imported waste paper by Chinese paper mills has not decreased. According to paper industry news analysis, the renewed demand for imported waste paper may be related to the low price of imported waste paper.

According to the statistics of PaperLink, the average price of imported CIF in 2015 was US$186, down 7.5% from 2014. The daily waste and European waste basically follow the price of US waste, and the price of JOCC is relatively strong. This is mainly due to the shortage of supply level; the price of European waste is weak, and domestic buyers are getting more and more, except for a large paper mill in South China. Regular purchases, other small and medium-sized enterprises are interested.

With the low price of imported waste paper, compared with the national waste, the cost-effective advantages of imported waste paper with better fiber quality are highlighted. Under this circumstance, large-scale paper mills with lower offshore logistics and overseas procurement costs have once again increased their preference for imported waste paper. From January to November 2015, the total amount of imported waste paper increased by 6% compared with the previous year, while the top ten papermaking enterprises in imports increased by 14% compared with the same period of last year. This means that while large enterprises increase their purchases, the procurement volume of small and medium-sized enterprises has shrunk, and the supply of imported waste paper has gradually concentrated in large papermaking enterprises.

Looking forward to 2016, Paperlink believes that the imported waste paper market is not optimistic, and prices are still dominated by low levels. China's economic growth is facing downward pressure. The situation in various industries is not very optimistic. The export volume is shrinking and the required packaging is reduced. Due to price and fiber considerations, imported waste paper is mainly used to produce high-quality packaging paper (used for export packaging). Therefore, in terms of demand, some domestic paper mills, especially small and medium-sized paper mills, may be less dependent on imported waste paper.

In addition, the exchange rate of RMB against the US dollar continued to fall, and the cost of importing waste paper raw materials by domestic paper mills rose relatively. This has become a hindrance to the price recovery. Once entering the off-season, the price of imported waste paper may face further decline.

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