Industry Overview - The Guangdong Provincial Paper Industry Association has issued the first "anti-involution" initiative in the domestic paper industry, aiming to promote high-quality development by resisting low-price competition, optimizing capacity structure, enhancing quality and innovation, and establishing self-regulatory mechanisms [1] - Guangdong is the second-largest paper-producing province in China, with a projected paper and board output of 26.48 million tons in 2024, an 8.1% year-on-year increase, accounting for 16.7% of the national total [1] - The packaging paper segment constitutes 72.3% of the total output, with main products including boxboard and corrugated paper [1] Price Trends - The paper industry is experiencing a wave of price increases, with major companies like Nine Dragons Paper and Lee & Man Paper announcing price hikes of 30 yuan per ton for products such as corrugated paper and recycled kraft paper starting August 1 [2] - The frequency of price adjustments has increased significantly this year, with multiple price hikes occurring in March-April, May, and July [2] - Rising raw material costs, particularly for waste cardboard, have been a primary driver of these price increases, with the market price for waste yellow cardboard reaching 1,475 yuan per ton as of July 21, a 15 yuan increase from June 30 [2] Market Dynamics - The packaging paper market, particularly for corrugated and boxboard paper, has faced a supply-demand imbalance, leading to a downward price trend in the first half of the year [3] - The average price for corrugated paper was 2,682 yuan per ton, down 2.44% year-on-year, while boxboard paper averaged 3,616 yuan per ton, down 3.42% year-on-year [3] - The gross profit margins for the corrugated paper and boxboard paper industries have declined, with margins at 9.97% and 18.96% respectively, reflecting ongoing pressure on profitability [3] Company Performance - Chenming Paper has issued a profit warning for the first half of 2025, expecting a net loss of 3.5 to 4 billion yuan, compared to a profit of 28.65 million yuan in the same period last year, primarily due to production halts for maintenance [4] - Nine Dragons Paper has received an upgrade from Citigroup, which anticipates a 58% year-on-year increase in core profit to 811 million yuan, with revenue expected to remain stable at approximately 28.782 billion yuan [4] - Lee & Man Paper is a global leader in the paper industry, with an annual production capacity exceeding 9 million tons, including 7 million tons of packaging paper [5]