A sound price adjustment must protect both sides: paper mills need to cover genuine costs and maintain stable supply, while customers should receive lower losses, more consistent quality and more reliable delivery. Pricing is sustainable only when total cost and cash efficiency improve across the relationship.

Latest Price Benchmarks

Market-monitoring unit: RMB per tonne; changes are versus the previous ten-day period.

June 2026 PPI for the manufacture of paper and paper products −0.1% year on year

July 2026 PPI for the manufacture of paper and paper products +1.2% year on year

H1 2026 Total profit of above-designated-size paper and paper-product manufacturers +27.5% year on year

Mid-August AA-grade 120 gsm corrugating medium RMB 3,228.8 | +0.5%

Mid-August Imported softwood pulp RMB 4,840.8 | +0.9%

Research sources:National Bureau of Statistics of China: July PPI; profits of above-designated-size industrial enterprises; mid-August market-price monitoring.

Important boundary:PPI, monitored market prices, a company’s average selling price and the customer’s net transaction price are different measures. Industry profit growth also cannot be attributed to price increases alone.

01 · THREE PRICE SIGNALS

Read the Three Price Signals Separately

The industry PPI fell 0.1% year on year in June and rose 1.2% in July, although it remained down 1.2% cumulatively from January through July. In mid-August, the monitored price of AA-grade 120 gsm corrugating medium rose 0.5% from the previous ten-day period, while imported softwood pulp rose 0.9%.

During the same period, the manufacturing new-orders index stood at 48.5% in July, below the 50% threshold. It is not a paper-industry order index, but it is a useful reminder: firmer prices do not mean that demand has strengthened simultaneously across every end market.

Research sources:National Bureau of Statistics of China: July PPI; mid-August market-price monitoring; July manufacturing PMI.

Level One | Notice Signal: Why Companies Propose Price Increases

On 10 August 2026, multiple Nine Dragons Paper mills issued customers with price-adjustment notices covering different grades and effective dates. Consolidating the verifiable originals produces the following operating snapshot.

Recent Sources of Price-Increase Notices

The original images were publicly reproduced by Paper Industry Observer. They do not replace evidence of the customer’s net transaction price or actual implementation.

Research sources:Customer notices reproduced by Paper Industry Observer; Sina Finance summary citing China Paper Magazine.

Level Two | Market Signal: Have Prices Started to Move?

For the same corrugating-medium specification, the monitored market price rose from RMB 3,216.3 per tonne in early July to RMB 3,263.2 in mid-July, was RMB 3,260.2 in late July, fell to RMB 3,212.4 in early August, and recovered to RMB 3,228.8 in mid-August.

This is not a one-way rise, but a sequence of “increase—pullback—modest recovery”. It shows that the distribution market is searching for a new price level, but it cannot substitute for mill ex-works prices or customers’ net transaction prices.

Level Three | Operating Signal: Have the Spread and Profit Been Retained?

The announcement is an unaudited preliminary assessment. It is closer to an operating outcome than a price-increase notice, but it still does not prove that every grade or every round of notices has been fully implemented.

Research source:Nine Dragons Paper: Positive Profit Alert.

02 · HOW PRICES ARE FORMED

What Drives Paper Prices Up or Down?

Driver One | Sustained Changes in Cost

Fibre, energy, chemicals, logistics, environmental operations and working-capital requirements together determine a paper mill’s cost base. Higher costs can create a need for price adjustment, but the phrase “raw materials have all risen” cannot explain every paper grade.

In July, purchase prices for timber and pulp were down 0.5% year on year and 2.0% cumulatively from January through July. In mid-August, imported softwood pulp rose 0.9% from the previous ten-day period and Shanxi premium blended coal rose 2.5%. Long-cycle year-on-year movements, short-cycle sequential changes and the fibre furnish of each grade are not identical; companies need to present their own cost bridge.

Driver Two | Supply, Demand and Inventory Permit Price Transmission

Rising orders, falling inventories, machine downtime or the exit of high-cost capacity can tighten short-term supply. New capacity, restarts, inventory accumulation or weaker downstream orders can create downward pressure. Price-increase notices and downtime plans are leading signals; orders, inventories, operating rates and post-restart prices provide confirmation.

Driver Three | The Product Creates Verifiable Customer Value

Customers deciding whether to accept a higher net price consider not only the mill’s cost, but also alternative supply and actual performance in use. More consistent quality, fewer web breaks and stoppages, lower converting losses and more reliable delivery can all reduce the customer’s total cost in use.

Lightweighting is not simply the use of less fibre; it means completing the same packaging task with less material. Meeting base-paper specifications does not automatically mean that the corrugated board or finished box will achieve the required performance.

Research sources:FEFCO Testing Methods; ISO 3037:2022.

Driver Four | Transaction Terms and Risk Are Repriced

The same quoted price per tonne can produce very different operating outcomes under cash payment or extended terms, delivered or ex-works pricing, and standard or special specifications. Freight, rebates, payment terms, minimum order quantities, quality claims and delivery volatility all affect net price and cash generation.

Paper prices can also fall for rational reasons: lower raw-material costs, new capacity, weaker orders, inventory accumulation, substitution, or discounts, rebates and extended payment terms used to secure volume. Direction cannot be judged from a quotation sheet alone.

03 · EFFECTIVE PRICE ADJUSTMENTS

How to Design an Effective Price Adjustment

Step One | Fix the Basis of Comparison

Establish a baseline by customer, grade, specification, delivery location, tax and freight treatment, payment terms and service conditions. Without a like-for-like basis, notice prices, average selling prices and customer net prices cannot be compared.

Step Two | Build the Cost Bridge

Break down fibre, energy, chemicals, freight, labour, quality losses and working-capital requirements. Short-term order decisions should consider incremental cash cost; sustained production should consider mill cash cost; long-term pricing and investment should consider full manufacturing cost. Financing and capital expenditure should be reviewed separately.

Research sources:Ministry of Finance: Accounting Standard for Business Enterprises No. 1—Inventories; Accounting Standard for Business Enterprises No. 17—Borrowing Costs.

Step Three | Test Orders, Inventory and Alternative Supply

Model at least three scenarios: a higher net price with stable orders; a higher net price with lower volume; and an announced increase that is surrendered through discounts or longer payment terms. Customer retention, operating rates, inventory and product mix must sit on the same operating scorecard.

Step Four | Put Customer Value into the Quotation

The explanation cannot stop at “our costs have increased”. Consistency, lightweighting, converting efficiency, delivery assurance, compliance evidence and collaborative development determine why a customer may accept a higher net price. Different products need not follow the same increase or timing.

Step Five | Price Independently and Track Realisation

If a notice proposes an increase of RMB 50 per tonne but the like-for-like net price rises by only RMB 30, the net-price realisation rate is 60%. The next checks are order retention, unit cost, gross profit, collections and operating cash flow.

Each business must determine price adjustments independently on the basis of its own costs, contracts and customer value. Competing businesses must not enter into or implement monopoly agreements that fix or change commodity prices.

Research sources:Anti-Monopoly Law of the People’s Republic of China; Provisions on Prohibiting Monopoly Agreements.

04 · SHARED VALUE ACROSS THE SUPPLY CHAIN

From Price Conflict to Shared Value

Tension between a mill’s need to raise prices and a customer’s need to control costs is natural, but it need not become a zero-sum contest. The answer is not a more forceful justification for higher prices, but a price adjustment that also delivers stable supply, better quality, lower customer losses and more sustainable product choices.

Item One | Costs Are Explainable

Identify which grade, fibre type, energy input or service cost changed, the comparison period used and the magnitude of the impact. Macroeconomic indices, actual company costs and customer quotations must remain distinct.

Item Two | Product Value Is Measurable

Connect the price adjustment to results at the customer’s site: whether the packaging task is preserved after lightweighting; whether edge-crush strength, bonding and box performance remain stable; and whether web breaks, warp, waste and downtime decline. The customer is buying a more stable production outcome and a more controllable total cost.

Item Three | Service Commitments Are Transferable

Include on-time, in-full delivery, lead-time volatility, emergency-order response, quality-complaint handling and problem-closure time in the service metrics. After a price increase, the customer should know exactly what supply assurance it is receiving.

Item Four | Efficiency Gains Are Shareable

Paper mills, corrugated-board plants and end customers can jointly improve demand forecasting, specification rationalisation, lightweighting validation, inventory positioning, grade-change schedules and loss data. Collaboration does not mean uniform pricing; it means reducing rush orders, obsolete inventory, repeated trials and quality losses through bilateral contracts and independent decisions.

Item Five | Sustainability Value Is Evidence-Based

Recovered fibre, lightweighting, fibre traceability, water and energy efficiency, and designs that are easier to recycle must all be validated for the specific grade and final package. A green label cannot replace evidence on strength, converting performance, recovery pathways and total customer cost, nor should breakage, waste or food loss be shifted downstream.

A sound price adjustment is not a contest for margin between upstream and downstream businesses; it uses more consistent products and service to reduce total system cost.

05 · NET PRICE AND CASH

Why Does Cash Lag Behind Quoted Price Increases?

Shanying International disclosed that the spread between the average selling price and unit cost of base paper was RMB 94.34 per tonne in 2025, narrowing 32.74% year on year, while the papermaking segment’s gross margin was 3.22%. Selling price, cost and margin do not automatically move in the same direction.

Research source:Shanying International: formal response to the regulatory inquiry.

In its interim report for the six months ended 31 December 2025, Nine Dragons Paper disclosed an 8.3% increase in sales volume and a 2.7% increase in average selling price, while gross margin rose from 9.5% to approximately 14.4%. The company attributed the improvement to higher selling prices together with lower raw-material costs. These figures are not for the first half of calendar year 2026 and are not an industry average.

Research source:Nine Dragons Paper: 2025/2026 Interim Report.

Cash must clear another hurdle. Changes in receivables, inventories and payables should be reviewed alongside operating cash flow, essential capital expenditure and interest burden. Without comparable segment cash-flow and volume data for the paper business, “operating cash flow per tonne” should not be calculated.

06 · LONG-TERM CAPABILITIES

How Price Recovery Becomes Capability

Additional cash often first replenishes working capital, pays interest and maintains capacity. Only sustained investment in quality, resource efficiency, ramp-up speed and delivery reliability—demonstrated through yield, unit consumption, repeat business and on-time delivery—becomes customer-verifiable value in the next cycle.

Research source:Valmet: paper-machine data and efficiency framework.

Smurfit Westrock disclosed in its 2025 Annual Report that price-adjustment clauses in some customer contracts may still be insufficient to cover higher costs. In its corrugated and consumer-packaging businesses, even where price increases can be implemented, a lag of approximately three to six months typically remains between raw-material inflation and realisation in customer pricing. This is not a rule for the Chinese market, but it demonstrates that price transmission takes time.

Research source:Smurfit Westrock: 2025 Annual Report.

Three “Price Increases” That Are Easy to Misread

A higher net price accompanied by a marked decline in volume, customer retention or operating rate may be only a price recovery within a contracting business. If gross-profit improvement comes mainly from lower raw-material costs, it may be more cyclical than structural. If profit rises without a corresponding improvement in operating cash flow, while receivable days or inventory days lengthen, the improvement may remain largely on paper.

Sound pricing is not about upstream and downstream businesses fighting over profit. It directs resources towards more stable, efficient and sustainable products and services, and is ultimately validated by orders, customer satisfaction and cash.

BIOTEN Observer

Understanding the logic of price increases is not the same as resisting them. A healthy paper value chain needs rational prices so that mills can procure reliably, maintain equipment, sustain environmental operations, improve quality and continue innovating. Customers, in turn, need each price change to have a clearly defined scope, a transparent cost basis, a service commitment and verifiable benefits.

What truly needs to improve in the paper industry is itspricing capability—the ability to translate costs, supply-demand conditions and customer value into independent quotations; itsmanufacturing capability—the ability to turn every tonne of paper into consistently qualified, saleable product; itsservice capability—the ability to convert quality, delivery and collaborative cost reduction into customer satisfaction; and itscapital-allocation capability—the ability to convert profit into operating cash and reinvest it in sustainable products and efficiency gains.

A price-increase notice expresses intent; the market price confirms direction; net price, orders, customer satisfaction and cash are the outcomes that show what the adjustment actually delivered.

BIOTEN Packaging focuses on whether value can truly be connected across paper performance, packaging conversion and end use. When each material property is applied where it belongs, differentiated high-quality products can enter the right applications and create lasting value through stable manufacturing and customer validation.