The peak season is not prosperous. Why is the leading paper industry shutting down, and when will the turning point of the paper industry come?

After entering September, according to past market experience, the paper industry has entered the traditional peak season of demand. But this year’s peak season is particularly cold. On the contrary, we saw that many packaging companies, such as Nine Dragons Paper, Dongguan Jinzhou Paper, Dongguan Jintian Paper, etc., have issued Shutdown Notices in what should be the peak season.

Let’s take Nine Dragons Paper, a leading paper company in China, as an example, and the new Shutdown Notice shows. The outage involves 5 bases of Nine Dragons Paper: Taicang, Chongqing, Shenyang, Hebei and Tianjin bases. These bases will continue to maintain a long-term shutdown plan from September to October. According to different paper types and different machines, they will be shut down for 10-20 days, and even some machines will continue to be shut down for up to 31 days. Affected paper types include: duplex paper, kraft cardboard, recycled paper, corrugated paper, and two-side offset paper. Although some of the company’s bases have issued Shutdown Notice in August, the new Shutdown Notice in September shows that more bases will be shut down continuously this time, even until October.

In addition to Nine Dragons Paper, other companies such as Dongguan Paper and Dongguan Jintian Paper have also joined the ranks of downtime. Many paper machines will be shut down for maintenance from September. Downtime can vary from 7-16 days.

At this stage, which should be the peak season, the shutdown behavior of many leading packaging paper companies makes this peak season seem particularly cold. We believe that this is due to a combination of factors. Although the demand for the paper industry has improved in September, under the influence of the epidemic, both exports and domestic demand have declined. The overall impact of the sluggishness is that the domestic paper industry is still in the trough period, and the turning point of the paper industry has not yet come. It is expected that the turning point of the traditional peak season will come slowly in the fourth quarter. On the other hand, paper mills take the initiative to shut down for maintenance, which is also a measure to ease the pressure on the supply side under the background that the overall demand side is still weak. By means of active shutdown, the inventory of the paper mill is reduced, and the market supply is reduced to balance the supply and demand relationship.