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How Long Can Corrugated Board Industry Survive?
Dec 18, 2018

CPP114】 China's corrugated board industry has had a tough year since it had a pretty good year from 2009 to 2014. Corrugated board industry bosses' helplessness and pain index extraordinary under the situation of continuous group price hikes, peer price competition, leapfrog boiler transformation, high social security costs and high logistics costs of paper mills.


One, corrugated board industry into life and death dilemma


In recent years, the continuous improvement of wages, raw paper, high oil price, high electricity price, high road fees, such as inserted in China's corrugated board industry on a few blood vessels, can survive is a miracle.


It should be said that the fate of corrugated board industry began after the Spring Festival of 2015, due to the withdrawal of 57 paper mills in dongguan water township area caused three consecutive rises in the pearl river delta paper industry, the butterfly effect quickly triggered resonance in the national paper industry, the domestic paper industry since then to pick up the rise. According to incomplete statistics, in the past two years, the paper industry initiated group price rises not less than 15 times. The price of raw paper is completely dependent on the original paper to survive corrugated board industry is fatal. According to a manager of corrugated board factory in the pearl river delta, the industry gross profit has been reduced to 14-18%, which is a zero boundary point. If the labor cost, loss of raw paper, production capacity is a little bad, the enterprise will be in the loss.


And really frustrating may not be the price of the original paper, after all, the price of the original paper can also be increased through the price of cardboard will be transmitted to the downstream carton enterprises. From 2012, the pearl river delta, the Yangtze river delta, bohai rim and other corrugated packaging areas concentrated in the collapse of enterprises tide and evacuation tide. Take the pearl river delta as an example, the closure or evacuation of toy factories, furniture factories, shoe factories, clothing factories and electronics factories resulted in the closure of thousands of carton factories. In recent years, guangzhou, dongguan, shenzhen, foshan, huizhou and other places into the laolai blacklist packaging enterprises more and more. On July 22, 2016, dongguan human resources bureau published a "blacklist" of 10 employers, including three packaging and printing enterprises. The downstream customers of the paperboard industry went bankrupt, the arrears of arrears, has been to let the paperboard factory owners sleepless nights.


Of course, boiler renovation, labor costs, high rents, high oil prices, high road costs are not energy-saving lamps, each boss is enough to drink a pot.


Second, forced capacity expansion


Logically speaking, in recent years, China's economy is slowing down, the export market in a shrinking, domestic demand is becoming more and more weak, corrugated board industry should be "capacity" to it, but it is not clear that the cardboard industry in recent years, especially in the pearl river delta and other regions manufacturers in four expansion capacity.


Shengyuan group, which only entered corrugated board industry in 2008, is taken as an example. Within 8 years, the company has introduced nearly 30 watt lines. Since 2012, the group has successively established shengyuan in heshan, shengyuan in hanchuan, shengyuan in kunshan and shengyuan in jurong, with about 15 new tile lines planned. In recent years, the revitalization of the pearl river delta, huali, huihua, hongfu, xinda and other types of cardboard factory have also changed the width tile line or technical transformation. In addition, guoteng, yongfengtai, China industry and other manufacturers are planning to new line.


Which one of these things happened?


Statistics show that as early as in 2005, dongguan has more than 600 corrugated board production lines, but most of the 1.6 meters width of domestic tile line. Up to now, these production lines have been seriously aging, productivity and efficiency can not compete with other enterprises more than 2.2 meters width of high-speed tile line. So some unwilling to withdraw from the market cardboard enterprises have to bite the bullet on the new line. As a result of the new high speed high width tile line is several times as many as the old tile line, resulting in the pearl river delta tile line overcapacity is becoming more and more serious, the industry a red sea.


Third, industry showdown is inevitable


For the future of corrugated board industry, inside and outside the industry people's views are quite different. Small make up that the next few years industry showdown is inevitable. Most of the backward capacity but unable to update the equipment of the cardboard enterprises can only reluctantly choose to quit, and a small number of well-equipped, well-managed enterprises will become the survivors of the brutal elimination of the market.


In the past few years, although the profit of the industry has been declining year by year, thanks to the explosive growth of e-commerce packaging and the huge amount of FMCG packaging, the corrugated board industry has maintained a relatively balanced growth despite the withdrawal of foreign enterprises.


However, corrugated board industry needs to be vigilant is that the situation is undergoing profound changes, these are very adverse to the cardboard industry:


Paper industry capacity is more and more concentrated, paper industry through the group price way to regain pricing power. Although the paper industry tons of paper profits are generally more than 300, but the paper mill seems unwilling to slow down the pace of price increases. And it is certain that in the second half of the year, the RMB exchange rate will further depreciate, the momentum of the rise in the price of raw paper is difficult to be restrained.


Cardboard industry capacity is scattered, the pearl river delta cardboard enterprises several times to group prices are due to the failure to coordinate and stillborn. Under the adverse circumstances of increasing excess capacity and poor operating conditions of downstream tertiary plants, the competition of low price will continue until the enterprises with relatively backward capacity, cash flow and management are eliminated.


As foreign capital withdraws and private companies close, there are far more unemployed than expected, and real estate is sucking the blood out of ordinary wage earners. Quantity from all over the country. Supermarkets collapse phenomenon, the consumption of the all the ability in a sharp contraction, the fast consumer goods such as food, beverage and cosmetic, clothing, shoes and other fashion market will be showed a trend of accelerated atrophy (if that situation in venezuela, is another matter), these will speed the elimination process of cardboard.


In addition, under the competition of low price, the capital chain of many cardboard enterprises gradually dried up, but Banks are reluctant to lend to the real industry with excess capacity, which may become the last straw to crush many cardboard enterprises.


Finally, corrugated packaging will also follow the downstream customers into the era of customization, corrugated board line is essentially a product of the industry 3.0 era, its production mode may be replaced by a new intelligent production mode.