Supply variables are expected to exceed expectatio

The Ministry of industry and information technology announced the list of enterprises with backward production capacity, backward production lines (equipment) and production capacity in 18 industrial industries nationwide in 2011, of which 8.196 million tons of papermaking were eliminated, involving 599 enterprises

elimination exceeds expectations, and implementation is the key: in May this year, when the Ministry of industry and information technology first announced the plan for the elimination of backward production capacity in 2011 (the elimination of backward production capacity in papermaking is 7.45 million tons), we are optimistic about the elimination of backward production capacity in the paper industry in the future in the report "what is the difference between another elimination of backward production capacity in the paper industry". We believe that in the context of national economic transformation, the elimination of traditional industries with high energy consumption, high shipping costs and excessive pollution is a very clear direction. The final results released by the Ministry of industry and information technology increased by 750000 tons, an increase of 10%. We believe that the elimination of backward papermaking production capacity is beyond expectations, both in terms of absolute volume and the proportion of elimination to the industry's production capacity. 8.2 million tons account for about 8% of the total capacity of the paper industry. If we subtract the capacity of coated paper, white cardboard and paper that are not affected by the elimination, the elimination amount accounts for nearly 10% of the total capacity. Moreover, according to our understanding from the papermaking association and other institutions, the elimination of backward capacity in the paper industry during the whole 12th Five Year Plan period will still be one of the key tasks of the industry. We expect that the proportion of eliminated capacity in paper industry during the 12th Five Year Plan period is expected to reach 10% - 15%. However, from past experience, we believe that the most critical is implementation. The most obvious example is the water mixing event of data elimination in 2010. This time, in order to strengthen the momentum of local governments and enterprises to eliminate, the Ministry of finance, the Ministry of industry and information technology, and the National Energy Administration jointly issued the "measures for the management of central financial incentive funds for the elimination of backward production capacity". On the one hand, the elimination incentive policy is strong for the better implementation of the policy, on the other hand, it is also prone to duplication, and it is also applicable to the situation that colleges and technical secondary schools stop reporting teaching demonstrations, Therefore, tracking the implementation of subsequent elimination will be the focus of our work

the elimination mainly focuses on box corrugated paper, household paper and cultural paper: at present, China's coated paper, white cardboard and paper have basically completed the integration, and the top five enterprises account for 60%-80% of the market share of the industry. The equipment of these three industries is basically the world's most advanced equipment, so these three industries are basically not affected by the elimination of backward production capacity. According to the analysis of the eliminated regions and the list of announced enterprises, we believe that the three industries that benefit most from this elimination are box board corrugated paper, household paper and cultural paper. These three sub industries are also industries with relatively low concentration of China's paper market at present. There are many large and small enterprises, and the world's most advanced equipment and backward equipment coexist. We believe that the 12th Five Year Plan period will be the purification period of these three sub industries, and the integration of the three sub industries is expected to be preliminarily completed in the next few years

product linkage, a spark, that is, the quality of the air in the car has become the focus of social attention, which can start a prairie fire: due to the existence of a large number of convertible paper machines in the Chinese market (for example, external coated coated paper machines can produce coated paper and offset paper; some coated paper machines can also produce coated cards; in addition, some coated paper machines can produce white card paper and gray background white paper), At the same time, due to the substitution relationship of paper in some fields, the boom of some sub industries will soon evolve into the inflection point of the whole industry

the paper market is expected to enter a boom period from 2012: in our medium-term strategy, "elimination is the biggest variable, waiting for quantitative change to qualitative change", we proposed that 2012 will be the inflection point of the paper industry. We reiterate this view again. If the elimination is implemented in place, the inflection point of the industry may be advanced. There are three main aspects supporting our view:

1. Improvement of supply-demand relationship: due to the shutdown, elimination and other restrictive measures on the supply side and the strong implementation of this measure, especially the elimination of backward production capacity this year exceeded expectations, as well as the accelerated elimination of small enterprises caused by the implementation of new environmental protection standards, we believe that the supply-demand relationship of the paper market has gradually entered a period of improvement in the fixed connection between the screw base of the ball screw and the broach base plate of the broach installed

2. Due to the weaker than expected demand in Europe and the United States and the decline in global commodity prices, the possibility of wood pulp price rise is small at present, and the main factors restricting the industry's profitability are changing

3. Industry concentration has increased, and the ability to transfer costs has increased: with the increase of mergers and acquisitions among industries, we believe that the concentration of the paper industry is expected to enter a period of rapid rise. It is estimated that in the next five years, the total market share of the top ten enterprises is expected to reach about 40% - 50%, while the top twenty enterprises are expected to reach about 50% - 60%, and the industry is expected to preliminarily complete the integration. With the increase of industry concentration, China's paper-making enterprises will gain long lost bargaining power, and the profitability of the industry will be greatly improved. Therefore, it is expected that China's paper-making industry will change qualitatively in the next few years