Based on statistics released by RISI on Dec 29, China containerboard's apparentdemand decreased by 2.5% yoy in November versus growth of 0.8% yoy inOctober. In terms of domestic production, Nov volumes fell 6.4% yoy after a 2.4%yoy drop in Oct. This is by far the worst contraction we have seen in two years, andmuch worse than other commodities that were more construction linked, such ascement and steel. We reiterate Sell on NDP with a target price of HKD10.98 andHold LMP with a target price of HKD8.3.    Domestic OCC buyers have gradually lowered the purchase price post China'sofficial announcement of the 2018 OCC import quota on Dec 25. Grade A OCCfell by RMB138/t or 6% wow, and RMB163/t or 7% in the last three weeks.    At RMB2,148/t, domestic OCC is still RMB900/t more expensive than importedOCC (after adjustment), which is averaging USD220/t. We see no reason to buydomestic OCC at these levels, as import quotas should continue to be relaxed inthe coming weeks as we enter the slow season. Lower domestic OCC prices havealso led to a RMB233/t decline in paper price wow.    Similar to our forecasts, RISI published their new supply forecasts on Dec 27. Italso sees a large backlog of new supply in the pipeline, similar to our analysispublished in Nov in the note, "As good as it gets". RISI expects 4.4/ 5.3/ >12 mtor 8.5%/ 10%/ >21% new supply in 2017/18/19 and beyond. This is similar to our forecasts of 4.6/ 9.6/ 5.9/ 3.9mt of new additions during 2017-2020, representing8.9%/ 18%/ 9.6%/ 6% gross capacity growth. Therefore, sector utilization maydrop significantly by 14ppt to 74% in 2020 from 88% in 2017, assuming that allof these new additions come to market as planned and that demand can grow3% each year.

声明：如本站内容不慎侵犯了您的权益，请联系邮箱：wangshiyuan@epins.cn 我们将迅速删除。