BEIJING — China’s paper industry has entered a new round of price increases, with leading producers raising prices for cultural paper and packaging grades from July 1 in response to persistent cost pressures and tightening supply.

However, despite improving market sentiment, industry profitability remains under pressure as producers contend with weak downstream demand and significant new production capacity scheduled to come online in the second half of 2026.

Major Paper Producers Announce Price Increases

Leading manufacturers, including Sun Paper, Nine Dragons Paper, Bohui Paper and Chenming Paper, have announced price increases of RMB 200 per tonne for various cultural paper products.

Sun Paper said the adjustment reflects market prices that have fallen below product value, while rising chemical, energy and logistics costs, together with production line conversions, have increased operating expenses and reduced effective supply.

Packaging paper grades have also recorded price gains.

Average prices for 250–400 g/m² folding boxboard reached RMB 4,038 per tonne in June, up 1.13% from the beginning of the month despite the traditional seasonal slowdown.

Meanwhile, average prices for AA-grade 120 g corrugated medium increased to RMB 2,820 per tonne during the first half of 2026, representing a 5.15% year-on-year increase.

Supply Discipline Supports the Market

Market analysts attribute the recent price recovery largely to coordinated production curtailments and maintenance shutdowns that tightened market supply.

Paper mills have maintained exceptionally low inventories, strengthening their pricing position.

As of June 18, sampled corrugated paper inventories had fallen to 237,200 tonnes, a 46.1% decline compared with the previous year.

Industry participants also noted that rising production costs have encouraged traders and downstream converters to accept higher prices, while some buyers have increased purchases in anticipation of additional price adjustments.

Profitability Remains Under Pressure

Despite the latest price increases, many paper manufacturers continue to operate with weak margins.

Industry observers describe the current round of price adjustments as a defensive response to rising production costs rather than evidence of a broad demand recovery.

Folding boxboard prices remain close to their lowest levels in the past five years, while theoretical gross margins for corrugated paper averaged only 8.33% during the first half of 2026.

Although pulp prices have eased slightly, paper producers continue to face elevated costs for recovered paper, coal, chemicals and freight, limiting any meaningful improvement in profitability.

Second-Half Outlook Depends on Demand Recovery

Analysts expect market conditions to vary across different paper grades during the second half of 2026.

Demand for cultural paper is expected to improve as textbook publishing and commercial printing enter their seasonal peak, while folding boxboard exports remain relatively resilient.

China exported 2.126 million tonnes of folding boxboard between January and May 2026, an increase of 7.26% year on year, with May exports rising 23.12%.

However, corrugated paper is expected to face greater pressure as additional production capacity enters the market and domestic demand remains subdued.

Looking ahead, industry participants believe the fourth-quarter peak consumption season—including Mid-Autumn Festival, National Day, e-commerce promotions and Christmas export orders—could provide further support for paper prices. Nevertheless, continued supply expansion and uncertain demand are expected to limit the pace of any sustained market recovery.

Last Updated on 17/07/2026 by Jota Machinery