Core Viewpoint - The paper industry is currently facing intense competition and significant profit pressure, with historical trends indicating that environmental policies have previously driven the exit of outdated capacity, and new national standards are expected to catalyze a new round of supply-side clearing in the industry [1] Group 1: Industry Overview - The paper industry is experiencing an oversupply situation, with paper prices and profitability at low levels. The operating rates and inventory levels are relatively stable in the short term, but the oversupply has intensified since 2020, leading companies to adopt aggressive pricing strategies to gain market share [1][2] - Capacity growth in the industry has accelerated, exacerbating the oversupply situation. From 2010 to 2020, domestic capacity growth outpaced demand growth, with a notable increase in capacity since 2020 [1][2] Group 2: Capacity Expansion and Competition - Taking double glue paper as an example, from 2020 to 2025, the industry is expected to add a cumulative capacity of 6.41 million tons, with leading companies like Sun Paper (1 million tons) and Nine Dragons Paper (1.85 million tons) significantly increasing production. This trend is driven by the saturation of various paper segments, prompting leading companies to diversify their product offerings [2] - The new capacity is often accompanied by self-sufficient pulp lines, which allows new entrants to adopt low-price competition strategies, putting further pressure on paper prices. Since the second half of 2023, the profitability of paper machines has been operating below the breakeven line [2] Group 3: Historical Context and Future Outlook - Historically, the high prosperity of the paper industry from 2015 to 2018 was primarily driven by supply-side factors, particularly the implementation of environmental policies that restricted both existing and new capacity, leading to significant increases in paper prices and profitability [3] - Looking ahead, the current cycle has seen rapid expansion of capacity and companies, with record losses and low profits. The supply side faces challenges such as small-scale production lines and low entry barriers in certain paper types, making it difficult for leading companies to eliminate smaller competitors. Additionally, new national standards are expected to enhance energy consumption limits, potentially catalyzing a new round of supply-side clearing [3]