With the constant decrease of fixed assets investment, in recent years, the paper industry has seen the results of capacity reduction and inventory reduction, and the profit inflection point appears. The paper sector had a remarkable performance in 2017. As the industry has been at a low profit for a long time and the supply side reform has led to the reduction of production capacity, the paper price rose sharply in the middle of the year, which led to the improvement of the paper enterprise's performance and the rise of the paper sector. Industry performance in the first quarter of 2018 is still high, and there are structural opportunities in the paper industry this year.

Since 2017, due to the adjustment of external waste policy, the price of international pulp has risen sharply, and the influence of environmental protection inspectors, the price of finished paper has risen sharply in Q3 in 2017. Looking forward to the whole year of 2018, in the aspect of waste paper system, the external waste quota will definitely decrease and become more and more concentrated in the leading enterprises, and at the same time, the environmental protection inspectors will be normalized or the paper packaging capacity will be accelerated to be cleared. Pulp paper series, the international wood pulp market in the next two years new production capacity, expect this year pulp price easy to rise difficult to fall, pulp paper varieties still have the possibility of rising prices.

According to the analysis report on the development prospect and investment strategy planning of the paper industry released by the prospective industry research institute, the listed companies in the paper industry achieved a total operating revenue of 1,597.15 billion yuan in 2017, up by 29.26% year-on-year, and the net profit attributable to the shareholders of the listed companies was 15.029 billion yuan, up by 116.15% year-on-year. In the first quarter of 2017, the operating revenue was 41.231 billion yuan, up 19.08% year-on-year, and the net profit attributable to the shareholders of the listed company was 3.861 billion yuan, up 25.91% year-on-year.

In 2017, the overall gross profit rate of the paper industry was 27.77% and the expense ratio was 18.29%; in the first quarter of 2018, the overall gross profit rate of the industry was 25.49% and the expense ratio was 14.98%. Although the price of wood pulp, coal and freight cost have all increased along with the price of finished paper since last year, the overall profitability of the industry has been significantly improved thanks to the increased proportion of self-pulping and effective promotion of forest pulp paper integration. In addition, as the industry continues to carry out refined management, operation management and cost control capacity will be strengthened in the future.

Number of China's paper industry enterprises in 2016 there were 6704, fell to 6663 in November 2017, top 10 papermaking enterprises nationwide capacity accounted for about 30% of the country's total capacity, top 100 paper mills production accounted for about 60% of the country's total capacity, capacity and papermaking industry continue to eliminate space, continuously eliminate backward production capacity, and is the inevitable requirement of industry intensive, large-scale development trend.

Strengthening environmental limit production in 2017, pulp and paper industry blowdown licence issued by the completed, must be licensed production, paper mills will increase environmental investment, cost rise further, small to less profitable ones under pressure from environmental capacity off acceleration, environmental policies conducive to the restructuring of the industry as a whole, make the existing capacity utilization, long term paper mills to tap market share will continue to focus and expand.

Overweight due to environmental policy, environmental protection 17 years revised the restrictive import classes can be used as a raw material of the regulations on environmental protection and management of solid waste as well as a variety of policy limits the garbage entry, to strict limits on imported waste paper, combined with the waste paper recycling system is not perfect in our country, the domestic waste paper quota, stacking coal, transportation, labor costs has increased, result in 17 years, waste paper prices rose significantly.

As the price of raw materials recovered, the price of waste paper fell back, but the forward-looking industrial research institute thinks that the environmental protection policy will only be tight in the future, the waste paper import quota will still be under pressure, and the new production capacity will also be affected by the environmental protection policy, so it is estimated that the price of corrugated cardboard and corrugated cardboard in the next 18 years will be under pressure.