The market for packaging paper is exciting again

The rise of packaging paper

Starting from the end of August 2019, most markets in China have seen price increases in testliner and corrugated paper (medium) and other types of packaging paper. This rise of packaging paper is likely to affect Vietnam's packaging paper market.

Reasons for price increase of packaging paper in China

Derived from the policy of restricting the granting of imported paper (RCP) to domestic manufacturing factories, the increase in the import tax rate of RCP from the US of China government, as well as the protection cost for environment such as steam, sewage... increased, so many businesses have switched to using RCP for domestic collection, leading to increased operating costs and raw material costs for paper production...

To further protect the environment, the Chinese State has also issued increasingly stricter regulations for plastic waste, especially single-use plastic, so consumers and businesses are choosing paper packaging for alternatives. Combined with that, consumer demand increased again as paper packaging manufacturers increased purchasing and increased reserves to 2-4 times for the main season, serving major holidays such as Christmas, New Year & Lunar New Year in Asia.

Price fluctuations in China market

Starting from the end of August 2019, the increase in price of testliner and corrugated paper (medium), other packaging paper took place throughout most of the Chinese markets and had a slight increase of 20–30 RMB/ton. In September 2019 in China, according to statistics, up to 52 enterprises have officially announced to increase the selling price from 50 - 100 RMB/ton, respectively from 7 - 15 USD/ton and are expected to increase an additional 100 RMB / ton (15 USD / ton) in the near future. The price increase movement started first and mainly from the top four Chinese manufacturing enterprises, namely Nine Dragons Paper, Lee & Man, Shanying International, Zhejiang Jingxing Paper, then spread to medium-sized businesses and small and takes place almost everywhere in China.

Prospects for manufacturers of Vietnamese packaging paper?

According to VPPA, in terms of Vietnam's total export volume of paper, testliner & medium paper exports to the Chinese market in 2017 accounted for 60.1%, in 2018 accounted for 71.2%, in the first 8 months of 2019, accounting for 60.5%, so it can be seen that China is a key market for export of testliner & medium paper of Vietnamese industrial packaging paper manufacturers.

The rise of packaging paper prices in China is likely to have an impact on Vietnam's packaging paper market. First of all, the price of commercially produced paper packaging is likely to increase by 300.000 – 500.000 VND/ton depending to the increase in the Chinese market and reduction the pressure to compete with the price of imported packaging paper. In addition, the export market rebounding in Asia will reduce pressure on price competition, especially the Chinese market, while production costs, environmental treatment, operating costs are higher.

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