Analysis of the "Double Opposition" Policy Cancelling the Good Relationship between Coated Paper and Flooring Industry

The "double reverse" policy was abolished, and the light industry papermaking industry mainly involved sub-industries including coated paper and flooring.

Coated paper “Double Anti” past lives: The US imposed anti-dumping and countervailing duties on Chinese goods began with coated paper. On November 20, 2006, the U.S. Department of Commerce launched a “double counter” survey on Chinese coated paper, and in 2007, The result of the final ruling was announced on October 18 and it was decided to impose a 21.12% to 99.65% anti-dumping duty and a 7.40% to 44.25% countervailing duty on Chinese coated paperboard companies. During the period due to the active response from domestic paper companies and the efforts of the Ministry of Commerce of the People's Republic of China, until September 21, 2010, the U.S. Department of Commerce once again announced the final award results, and determined that the dumping rates of the compulsory responding companies Jindong Paper and Sun Paper were respectively 7.6% and 135.83%, the average tax rate of Chenming Paper was 7.6%, and the tax rate of other Chinese companies was 135.83%. In the subsidy decision, the rates of compensation for compulsory respondent companies Jindong Paper and Sun Paper were determined to be 17.64% respectively. And 178.03%, the rate of subsidies for other Chinese companies is 17.64%. Before the “two parties”, China exported nearly 300,000 tons of coated paper annually to the United States, and then began to decrease. After the US Department of Commerce announced the final results in September 2010, Chinese paper companies basically withdrew from the US market and lost an important export area.

The long-term favored coated paper and other cultural paper industries, but the short-term benefits are limited: After the “double reverse” policy, Chinese paper companies basically lost the US market channels, and due to repeated policies, the US dealers’ enthusiasm for cooperation in the near future. It may not be very high. And from the absolute amount of view, even if exports to the United States can be restored to 300,000 tons, for the domestic copperplate paper market 2 million tons of excess capacity, it is also a cup of water. Therefore, we believe that the cancellation of the "double reverse" policy will have a limited effect on domestic paper companies in the short term. However, in the long run, we believe that compared with the US paper companies, Chinese enterprises still have strong competitiveness, and the export volume of coated paper to the United States will gradually increase, which will help alleviate the imbalance in domestic supply and demand. First of all, from the cost point of view, in 2010 the United States copper coated paper tons of production costs 956 US dollars, while China's coated paper production costs only 770 US dollars, a difference of 186 US dollars; second from the price point of view, the current US market price of coated paper 7000-7500 yuan / ton The price of domestic coated paper is 5,800 yuan/ton, and the profitability of exports is obviously better than that of the domestic market, which is more attractive to domestic paper companies. The listed A-share companies with coated paper business in the domestic A-share market include Sun Paper, Chenming Paper, and Huatai Securities.

Supply and demand are unbalanced. Coated paper is difficult to improve in the short term: At present, the domestic production capacity of copperplate paper is 8.1 million tons, of which, 3 million tons of new production capacity was added in 2010-2011 (APP 1.2 million for Gimhae and 400,000 tons for Oji Paper. Mingming Papers 800,000 tons, China and Thailand shares 600,000 tons). In terms of demand, China's coated paper market has a capacity of about 4.7 million tons, a compound growth rate of 8.3% over the past five years. Taking into account export factors (about 1.35 million tons of coated paper is expected to be exported in 2011), only 82% of coated paper companies are started, and the overcapacity is 200. About tons. In 2011, the domestic coated paper market was affected by the release of new production capacity. At the same time, downstream demand weakened due to economic downturn and prices continued to fall. At present, the average price of coated paper is 5,600 yuan/ton, which is a drop of 1,130 yuan or nearly 16.8% from the second quarter high. We believe that despite the cancellation of the “dual-reaction” policy, China’s export of coated paper will increase next year, which is still not enough to alleviate the excess status. The fundamental improvement of the domestic coated paper market still takes about two years.

The short-term benefits of the floor will still need to be improved in the real estate market for a long time: The US Department of Commerce launched an investigation on China's floor export cases in October 2010, and made a final investigation of the results of the investigation in October 2011, levying zero on China’s products related to the United States. - The countervailing duty rate of -26.73% and the anti-dumping duty rate of 0-58.84%, of which, the comprehensive tax rate of 78 Chinese companies participating in the suit shall not exceed 5%, and the combined rate of other companies not participating in the suit shall be 85.57%. According to the Flooring Professional Committee of the China Wood and Wood Products Distribution Association, the amount of “double reverse” floors involved amounts to 10 billion yuan, accounting for 10% of China’s total floorboard production value. Therefore, from the absolute amount, the domestic flooring companies are more favorable. However, for the domestic flooring market, the main problem is the risk of weaker downstream demand caused by the decline in real estate sales, and the overall overcapacity in the domestic flooring industry is relatively large. Therefore, the cancellation of “double reverse” flooring is a contribution to domestic flooring companies. However, it is still not enough to change the downward trend of the industry.