Sellers of "1G," the materials and supplies used to make paper boxes, have moved to raise prices again less than two years after a 2024 hike. They judged it was no longer possible to endure worsening profitability. Small and micro processors are feeling the strain because it is hard to immediately reflect the 1G price increase in their supply prices.
According to the paper industry on the 6th, Taelim Paper and Jeonju Paper completed increases in corrugated 1G prices between Dec. 2024 and Jan. 2025. Korea Export Packaging also carried out an increase in mid-Jan. 2025, and Ajin P&P was said to have already reflected part of an increase and is proceeding with additional adjustments in stages. The size of the increases ranges from 10% to 25%, depending on the company.
Asia Paper, which serves as a benchmark for corrugated prices, along with mid-sized Shindaeyang Paper and Sambo Corrugated Board, are coordinating the timing of increases centered on their sales divisions. Hansol Group affiliate Hansol Papertech, which has been the subject of sale rumors, sent a price increase notice.
The paper industry is emerging from a slump. The 1G price increases are the result of a combination of unstable raw material price trends, labor cost burdens, and a worsening fixed-cost structure. Imported pulp and recycled wastepaper, the main raw materials for corrugated 1G, are directly affected by the global economy and exchange rate fluctuations. The price of SBHK (southern bleached hardwood kraft from the United States) rose to $700 per ton in Jan. 2025 from $665 per ton in Jan. 2024.
Although the price burden has eased from the June 2024 peak ($895 per ton), the prolonged high-cost structure has made the decline in results clear.
Taelim Paper's net profit was about 81.6 billion won in 2022 but was halved to 41.8 billion won in 2024. Jeonju Paper posted net losses of more than 30 billion won in both 2023 and 2024, and Korea Export Packaging also saw net profit fall about 84% to about 3.2 billion won in 2024 from 20 billion won in 2022. Asia Paper, Shindaeyang Paper, and Sambo Corrugated Board are still in the black, but profitability is trending downward.
Paper companies raised 1G prices once in mid-2024. The increase then was between 80,000 won and 90,000 won per ton. That was about 20% higher than in 2021. Taelim Paper and Hansol Papertech, which joined prior price hikes, have implemented additional increases recently despite sale rumors, citing poor results and expense pressures.
Rising 1G prices are expected to burden small and micro corrugated processors. Processors receive 1G and produce finished packaging such as logistics boxes and product packaging boxes. Because they often have long-term supply contracts with major retailers and manufacturers, it is difficult to raise supply prices in the short term, inevitably eroding margins.
An industry official said, "Even though the KOSPI is hovering above the 5,000 level in a bull market, corrugated-related stocks are failing to break away from near record lows," adding, "The poor results and worsening revenue over the past few years are reflected in share prices."
The official added, "Only when the supply price linkage system is operated effectively will a structure take hold in which the rise in costs is shared," adding, "Improvements in the supply structure and an overall strengthening of the industry are also needed."