Packaging printing paper prices or stop falling rebound

According to data from the China Foreign Exchange Trading Center, the central parity of the renminbi against the US dollar was reported at 6.2298, which was a drop of 1136 basis points from the previous trading day, and the rate of decline was 1.8%, the largest decline in history, and hit a new low on April 25, 2013. . This means that to exchange RMB for 10,000 yuan, yesterday spent a lot more than 1136 yuan compared with the previous day.
In the current era of economic globalization, the adjustment of the RMB exchange rate can be described as a result of a full swing, affecting all industries in China. So, how large is the impact of exchange rate fluctuations on the papermaking, packaging and printing industries? Will the price of packaging and printing paper continue to rise?

The devaluation of the renminbi makes the papermaking industry Yaliyamada

Once the renminbi enters a devaluation channel, it is not good for paper companies listed in Hong Kong such as Xiaolong, Liwen, Chenming and Sun. This will mean that a large number of offshore hot money in Hong Kong stocks will be withdrawn, and Hong Kong stocks are under great pressure. Taking yesterday as an example, after the plunge of the renminbi, Nine Dragons Paper fell 8.8%, and Lee Man Paper also saw a 4.4% decline.

As half of the pulp and waste paper used by China's leading papermaking companies comes from overseas, the renminbi has fallen sharply against the US dollar and the prices of raw materials such as imported pulp and waste paper will rise significantly, putting pressure on the Chinese paper industry.

Of course, the devaluation of the renminbi can reduce the price of Chinese exports and ease the current rapid decline in export trade. With the export falling back, the market demand for paper will pick up, which is obviously beneficial to paper-making companies.

The devaluation of the renminbi has mixed the packaging and printing industry

Some independent media believed that the central government's devaluation of the RMB exchange rate was a positive response to the 8.3% drop in export trade in July. This move is conducive to improving the competitiveness of China's export commodities in terms of price. It is undoubtedly long-term drought in the export processing and manufacturing industry. Therefore, this exchange rate adjustment will definitely be of great benefit to companies that provide package printing support for export processing and manufacturing.

Over the past period, Southeast Asia and India’s exports have increased by more than 20%, while China has recorded negative growth. This has a significant relationship with the depreciation of exchange rates in Southeast Asia and India while China maintains a strong monetary policy.

However, everything has its advantages and disadvantages. The downward adjustment of the RMB exchange rate will cause two adverse effects on packaging and printing companies. On the one hand, the cost of importing packaging and printing machinery and equipment will increase; on the other hand, due to the raw materials in the upstream papermaking industry. With rising costs, the rising cost of papermaking raw materials is likely to be transmitted to the downstream packaging and printing industry. In other words, if the RMB exchange rate maintains its devaluation trend, the future of packaging and printing paper will return to the upward track.

The future market depends on the depreciation rate of the RMB exchange rate

In the context of the overall downturn in the real economy and the accelerated withdrawal of foreign-funded enterprises, a 2% devaluation of the renminbi is still insufficient to stop the declining trend of the increasingly fragile export industries. Liu Dongliang, a senior analyst at China Merchants Bank, believes that the onshore renminbi will usher in a new round of depreciation, which may be above 5%.

If the exchange rate of the renminbi continues to depreciate, there will be a significant increase in the production of foreign orders or the provision of package printing companies for export processing. Paper companies that are under great raw material cost pressure will have to continue to increase the base paper price, and the new wave of price increases will restart.

However, it is certain that the depreciation of the renminbi will be closely watched and regulated by the central bank, so that there will be no sharp cliff fall or disorderly devaluation.

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