Nearly a Year Low! The Price of Pulp Has Accelerated To Fall

Recently, amidst the falling sound, the pulp has accelerated downward, and the price of hardwood pulp has hit a new low in the past year, providing strong support for the profit recovery of the paper industry in Q2.

The spot price of hardwood pulp has been declining rapidly since the end of the year. During the same period, softwood pulp also saw a significant decline. Considering that paper companies generally have 1-3 months of pulp inventory, the decline in pulp prices in Q1 means that the pressure on the cost side of paper companies in Q2 has eased.

A reporter from the Financial Associated Press learned from the soft commodity team of China Securities Construction Investment Futures that the current pulp is facing the dual pressure of high inventory and weak demand at the same time, and the overall price fluctuation trend of pulp is expected to be downward.

In terms of inventory, the number of days of global pulp inventory has increased significantly, which has exceeded the supply balance point, showing that the shipment speed has slowed down significantly. On the consumer side, North America, Europe, and the domestic market showed no signs of recovery, and the capacity-to-shipment ratio data continued to decline. Looking forward to the market outlook, under the consensus that new production capacity will be released one after another, the market generally believes that pulp prices will continue to fall, so the motivation for stocking up in advance is limited.

The upcoming Q2 is the traditional off-season for the domestic paper industry.  A reporter from the Financial Associated Press previously learned from a large paper company that the current demand is relatively weak. The contradiction between the supply and demand of paper is prominent, and cultural paper is relatively stable.

It is understood that the current market supply of white cardboard and household paper is sufficient, and the demand for pulp is down and the demand is weak. Price competition may intensify. The cultural paper has benefited from the Q1 publishing bidding orders, and the demand side has certain support. However, as the peak season of orders passes, How to solve the inventory that is still at a high level will be a difficult problem for the industry in Q2.

It is worth noting that the expectation of “declining pulp to improve papermaking profits” has emerged since the second half of 2022 and has been performed for a long time. During this period, major stocks in the papermaking sector also performed well. However, due to frequent emergencies such as the suspension of production by pulp companies and the shortage of transport capacity, the inflection point of pulp decline has been postponed repeatedly, and the profit improvement expectations of paper companies have also been postponed from Q1 to Q2 this year.