Shenwan Hongyuan Group: The bottom of the paper industry is established, supply-side integration and clearing, medium and long-term profitability is on the rise.

Shenwan Hongyuan Group released a research report stating that since the fourth quarter of 2024, pulp prices have gradually stabilized and are expected to continue rising in 2025. However, due to supply pressures, the short-term upward potential is limited. In the medium to long term, pulp prices are expected to rise more easily than fall, and integrated pulp and paper companies are likely to benefit. In terms of bulk paper, the industry is experiencing a phase of supply contraction, with pulp and paper products showing price elasticity. The industry has experienced several years of bottoming out, and a trend of improvement in supply and demand is expected in the medium to long term. In summary, paper prices and profitability are more stable than bulk paper, with some sectors still planning to expand production, so it is important to monitor any changes in the supply and demand landscape that could impact paper prices. Shenwan Hongyuan Group's main points are as follows: Wood pulp: Since the fourth quarter of 2024, pulp prices have gradually stabilized and are expected to continue rising in 2025. However, due to supply pressures, the short-term upward potential is limited. In the medium to long term, pulp prices are expected to rise more easily than fall, and integrated pulp and paper companies are likely to benefit. Review of pulp prices: In the second half of 2024, new pulp production capacities were gradually put into operation, causing pulp prices to peak in May 2024 before falling. Overseas pulp factories announced production cuts, the price difference between softwood and hardwood pulp is at historically high levels due to no new production capacity for softwood, and domestic paper factories have been increasing their purchases of wood pulp, leading to a gradual stabilization of pulp prices in the fourth quarter of 2024. From January to March 2025, there were three consecutive months of price increase for out...