Starting from 2022, my country's paper making industry has set off a wave of expansion. Paper companies such as Nine Dragons Paper, Sun Paper, Xianhe Co., Ltd., and Wuzhou Special Paper have invested in projects of tens of billions of yuan, pushing the expansion wave to its peak. [This round of expansion from 2022 to 2024 is expected to involve an additional capacity of 7.8 million tons. Among them, at least 5 million tons of paper making capacity will be completed in 2024.

It is worth noting that the above-mentioned capacity data are all project planning capacity. Considering that it usually takes about 2 years for paper making projects to reach full production after they are put into production, the above-mentioned 5 million tons of capacity cannot be fully implemented this year. However, at a time when demand is weak, any "slightest disturbance" on the supply side is enough to affect the psychology of downstream buyers, thereby forming an expectation that base paper is "difficult to rise and easy to fall", exacerbating the pressure on upstream paper companies.

This round of expansion is more focused on the future and seizing production capacity indicators. "Most of the new production capacity is concentrated in Guangxi and Hubei. It is very likely that only these places can get project approval (indicators)." It is reported that in the statements of relevant paper companies, these two provinces can radiate the South China and East China markets and have certain pulp resources. They can build supporting pulp production lines. Combined with shipping convenience, the project is expected to have a greater advantage in cost.

But in the short term, the peak of capacity release has come suddenly, which will undoubtedly aggravate the market's concerns about the imbalance between supply and demand in the paper industry. A person from a listed paper company told Cailianshe reporters that some investment institutions have expressed similar concerns, but from the perspective of paper companies, there is a large room for regulation on how to control the progress of project construction and production. "It is unlikely that when market demand is sluggish, companies will release new capacity in a concentrated manner."

But in the short term, the peak of capacity release has come suddenly, which will undoubtedly aggravate the market's concerns about the imbalance between supply and demand in the paper industry. A person from a listed paper company told Cailianshe reporters that some investment institutions have expressed similar concerns, but from the perspective of paper companies, there is a large room for regulation on how to control the progress of project construction and production. "It is unlikely that when market demand is sluggish, companies will release new capacity in a concentrated manner."

But in the short term, the peak of capacity release has come suddenly, which will undoubtedly aggravate the market's concerns about the imbalance between supply and demand in the paper industry. A person from a listed paper company told Cailianshe reporters that some investment institutions have expressed similar concerns, but from the perspective of paper companies, there is a large room for regulation on how to control the progress of project construction and production. "It is unlikely that when market demand is sluggish, companies will release new capacity in a concentrated manner."

In fact, this round of domestic papermaking expansion has also invisibly increased its own cost burden. At a time when the global papermaking industry is in a downturn, China has become the best market for global pulp suppliers. In 2023, the rigid inventory replenishment demand of domestic paper enterprises has formed a significant support for the pulp market. Compared with the European and American markets, the increase in downstream production capacity in my country has brought more rigid inventory replenishment demand, and made domestic pulp prices rebound first ahead of other countries in the world.