Packaging / Advertising & Office

The April financial data released by the people's Bank of China shows that all credit indicators have declined significantly, indicating that the demand for funds by the domestic real economy has weakened. As a forward-looking indicator of economic operation, financial data has a strong guiding role for the domestic packaging paper market. The credit demand has dropped rapidly, or it may increase the difficulty of economic repair, and the price of wrapping paper is also facing certain downward pressure.

According to the financial data released by the people's Bank of China in April, the increment of social financing scale in April was 910.2 billion, an increase of 946.8 billion less than that in the same period of last year; In April, RMB loans increased by 645.4 billion, a year-on-year decrease of 823.1 billion. As the financial data have strong forward-looking guidance for the operation of the domestic economy, the decline in credit growth is greater than the market expectation, increasing the market's concern about the economy. Relevant credit indicators have certain guiding significance for the price trend of domestic packaging paper.

The stock of social finance maintains a weak pattern, or continues to put pressure on the price of packaging paper

The fall in domestic credit demand may continue to put pressure on the domestic packaging paper market. From the growth of domestic social financing stock and the trend of domestic corrugated paper monthly price, it can be seen that the growth of social financing stock has certain forward-looking guidance on corrugated paper price. From the historical data, the growth rate of social financing stock generally guides the price of corrugated paper in 1-2 quarters. The increase in the growth rate of social financing stock also means that enterprises and residents have increased their willingness to invest and consume, and the economy has entered a period of expansion. The drop in the growth rate of social financing stock means that the financing demand of enterprises and residents is weakened, which in turn inhibits investment and consumption and increases the downward pressure on the economy. The economic transmission cycle of funds is also 1-2 quarters, which is synchronously reflected in the price trend of corrugated paper.

The high point of the last round of social finance growth was in November 2020, and then it continued to fall. The low point appeared in September and October 2021, and then it showed a pattern of low-level fluctuation. Although the domestic corrugated paper price once rose during this process, it was mainly affected by the tightening of the supply side. In fact, the demand pressure has been increasing since the second quarter of 2021. Since November 2021, the price of corrugated paper has entered the downward channel.

Due to weak domestic capital demand, the growth rate of social financing stock continues to decline, which may keep the corrugated paper price under pressure in the later period.

The decline of Shibor interest rate indicates that investment and consumption are weakening

Interbank lending rate is another key indicator to reflect the capital market, which intuitively shows the impact of the financial market on the price of corrugated paper.

According to the two high-frequency data of the daily price of national waste yellow paperboard and the 3-month interest rate of Shibor, the trend correlation between the two is stronger. Similarly, in the Shibor interest rate rising stage, it indicates that the real economy has increased demand for funds, the economic situation is better, and vice versa. From the current situation, although the domestic monetary policy is relatively loose, the demand for social funds is weak, and the Shibor interest rate continues to decline.

From the perspective of credit structure of social finance, medium - and long-term loans of enterprises increased by 395.3 billion less than the same period last year, while short-term loans increased by 19.9 billion more than the same period last year. Under the background of increasing operating pressure, enterprises' demand for short-term liquidity increases, but the medium - and long-term financing demand weakens, which also indicates that enterprises' expectations for future economic growth are weakened.

From the perspective of residents, household loans decreased by 217billion in April, a year-on-year decrease of 745.3 billion. Among them, housing loans decreased by 60.5 billion, a year-on-year decrease of 402.2 billion. Consumer loans excluding housing loans decreased by 104.4 billion, a year-on-year decrease of 186.1 billion. Operating loans decreased by 52.1 billion, a year-on-year decrease of 156.9 billion. Household credit also fell by a large margin. Affected by many factors, such as the increase in unemployment rate, the slowdown in the growth of household income, and the control measures in some parts of China, consumer demand was strongly inhibited.

Due to the pessimistic investment and consumption expectations of enterprises, residents and other departments, Shibor interest rate may continue to decline, which is difficult to form an effective support for corrugated paper prices.

On the whole, the credit index is also a leading indicator reflecting the domestic economy, which has a strong guide to the trend of the packaging paper market. In April, the domestic credit data was weaker than the market expectation. Although there were emergencies that restrained the demand for funds, they also strengthened the pessimistic expectation of the market on the economic outlook. If market confidence fails to recover effectively, domestic packaging paper prices may still face greater downward pressure.