Zheshang: Improvement in supply and demand + self-sufficiency in fibers leads to better profitability in high-end box boards.

Zheshang released a research report stating that the price increase of corrugated paper during the off-season in 2026 exceeded expectations for the first time since 2022. The bank believes this is mainly driven by the marginal improvement in the supply and demand of corrugated paper, coupled with rising energy costs, and looks forward to the peak season performance from July to November. The industry is approaching a dual turning point of "supply contraction" and "cost push," which, alongside the gradual improvement in the supply and demand structure and the continuous rise in overseas waste paper and energy costs, will force import paper prices upward, thereby supporting a strong sustainability in domestic paper prices driven by both costs and supply-demand dynamics. Zheshang's main points are as follows: The price increase of corrugated paper since May during the off-season exceeded expectations. The price increase of corrugated paper in the off-season in 2026 exceeded expectations for the first time since 2022. From February to July 2026, the cumulative price increase for corrugated and boxboard paper reached over 300 yuan. This round of price increase is believed to be primarily driven by the marginal improvement in the supply and demand of corrugated paper, along with rising energy costs, and is expected to perform well during the peak season from July to November. The industry is welcoming a dual turning point of "supply contraction" and "cost push." The industry's operating rate is marginally increasing. On the supply side, domestic capacity expansion is nearing its end with no follow-up plans, combined with high costs of waste paper and energy exerting pressure on import profits and reducing import volumes, while export channels have significantly improved. This gives strong sustainability to the supply contraction; on the demand side, while explosive growth is lacking, there is an overall moderate recovery and marginal improvement trend. As the supply-demand structure improves, the continuous rise in overseas waste paper and energy costs will force import paper prices to rise, thereby providing strong sustainability in domestic paper prices driven by both costs and supply-demand. Market share of boxboard and corrugated paper. Boxboard: The resource presents slight barriers, with the industry's CR5 showing an upward trend, reaching a 69% market share by 2025. This includes 27.5% for Nine Dragons, 14.1% for Shanying, 13.9% for Lee & Man, 9.0% for Sun Paper, and 4.4% for Rongcheng. Corrugated paper: The resource barrier is low, and the industry's CR4 proportion is showing a downward trend, projected to be 22.6% by 2025. Nine Dragons holds the highest market share at 14.3%, followed by Shanying at 3.3%, Rongcheng at 3.0%, and Lee & Man at 2.1%. Core company capacity summary. (1) Nine Dragons: 13.43 million tons of boxboard, 3.7 million tons of corrugated paper, 7.49 million tons of pulp; (2) Sun Paper: 4.4 million tons of boxboard, 5.35 million tons of pulp; (3) Lee & Man: 6.78 million tons of boxboard, 800,000 tons of corrugated paper, 950,000 tons of pulp; (4) Wuzhou: 980,000 tons of corrugated paper, 300,000 tons of pulp; (5) Linping: 1.1 million tons of boxboard, 350,000 tons of corrugated paper. Risk warnings. 1. Fluctuations in raw material prices; 2. Over-concentration of capacity release; 3. Downstream demand falling short of expectations; 4. Deterioration of competitive landscape.