Pulp Continues to Fluctuate in A Narrow Range, Pay Attention to The Improvement of Global Shipments and Paper Companies' Profits

Although the supply improvement is expected to increase, it will take time for global pulp shipments to recover, and it will be difficult for pulp prices to fall smoothly in the short term. However, due to the low enthusiasm of paper board company to start operation, the weak demand does not support the continued rise of pulp prices.

Since December 2022, the price of pulp futures has fluctuated at a high level, and the contracts for near and far months have clearly differentiated. Pulp futures 2301 contracts have been driven by tight spot prices to new highs, and the current disk prices have risen to import costs. However, affected by the continuous decline in external quotations and the expectation of new overseas production capacity, the 2305 pulp futures contract showed a narrow range of oscillations. At present, the price difference between the 2301 contract and the 2305 contract of pulp futures has reached 960 yuan/ton, which deviates from the normal operating range.

The expectation of supply-side improvement has been strengthened, but the negative factors have not yet materialized. It will take time for global pulp shipments to recover, and it will be difficult for pulp prices to fall smoothly in the short term. From the perspective of the demand side, as the Spring Festival holiday approaches, market downtime for maintenance has increased. The current industry profit margin has dropped sharply year-on-year, and the price of paper products has further weakened. Demand does not support pulp prices to continue to rise. Therefore, the short-term pulp far-month contract may maintain a narrow range of oscillations, and the pressure on the supply side is expected to be reflected at the end of the first quarter.