Chinese buyers boycott, but wood pulp prices are rising against the trend! How to break the game?

May 30, 2024

Chinese buyers boycott, but wood pulp prices are rising against the trend! How to break the game?

Paper introduction future network 2024-05-30 07:30 Guangdong


Despite escalating resistance from Chinese buyers, suppliers seek to raise pulp import prices in the Chinese market, adding to the unusual fact that pulp prices are higher than finished products.
 In the two weeks ended Thursday, May 23, the supplier has raised its offer for northern bleached cork kraft paper (NBSK) pulp imported from Canada and Northern Europe to $850- $870 per tonne. Traders, futures investors and small and medium-sized paper mills all ignored the rise, saying demand and pricing in the domestic market had stalled and the Shanghai Futures Exchange lacked arbitrage opportunities. The past two weeks, the biggest September BSK contract on the exchange, has been trading sideways, fluctuating between Rmb 6,200 and 6,500 per tonne, equivalent to $758- $795 per tonne, excluding 13% VAT and Rmb 120 per tonne logistics costs. On May 23, the contract was settled at Rmb 6,386 per ton, equivalent to us $766 per ton, excluding VAT and logistics costs. Traders and futures investors are keen to buy resale NBSK for futures trading, with the grade price up rmb 103 from RMB 6,495 last week to RMB 6,598 this week. Excluding VAT and logistics costs of RMB 150 per tonne, this price is equivalent to US $788 per tonne. The price is lower than the NBSK import price and is unattractive to traders who hoard the class for resale to domestic buyers. But specialty mills have reportedly paid about $850 per ton to get some premium Canadian NBSK tonnage, although the price for such deals was not included in the Fastmarkets's assessment. Large steel mills that have signed long-term contracts have accepted price increases from sellers and continued to purchase."NBSK supply is relatively more tight than bleached hardwood kraft paper (BHK) pulp due to supply disruption and transportation constraints. We charge the class at $830 to $840 per ton, " said a high-volume end-user buyer. NBSK supply was limited by a strike in Finland from March to April, an explosion in Metsa Group and the announcement on May 9 that Canfor Pulp would indefinitely shut down its 300,000-tonne NBSK production line at its Northwood plant in Canada. Meanwhile, the cost of shipping pulp cargo is rising due to the diversion of the Red Sea and the drought of the Panama Canal, and delays on routes from the Americas and Europe to Asia have increased, according to seller and buyer contacts. Customers in China and South Korea complained that they had not yet received the BSK and BHK goods ordered in February. Eventually, NBSK imports from Canada and northern Europe were Thursday at $810 to $840 per ton, with the midpoint was $825 per ton, up $15 a ton from two weeks ago. Most BHK producers, including Suzano, Bracell and Eldorado, have announced June BHK orders to rise by $30 a ton in China and other Asian markets. Chinese buyers stepped up their resistance when suppliers asked to raise orders in May for $30 a ton, and sharply cut purchases. Facing the growing rejection of Chinese customers, suppliers were surprised by insisting on another $30 a ton. The price of BHK in South America has risen to $740 to $750 a tonne after the $30 a tonne increase in May. Meanwhile, Bracell's two Asian subsidiaries, Asia Pacific Resources International (APRIL) and Asia Symbol (Asia Symbol), followed suit, demanding a $30 BHK increase in China and other Asian countries. APRIL attributed part of the continued price rise to Bracell's decision in August to convert one of the two BHK production lines at its Sao Paulo plant to produce dissolved pulp for 30 days. The plant has a total BHK production capacity of 2.1 million tons per year. Singapore-based APRIL said the production shift is expected to remove 140,000 tonnes of BHK from the market. Asia Pulp & Paper (APP) also announced that BHK exports to other Asian markets would rise by $30 a ton, citing rising logistics costs and production restrictions caused by accidents at The Monument plant in Indonesia. On April 28, the plant's backup boiler exploded, causing the suspension of its 1.1 million tonne BHK production line and toilet paper machine for more than two weeks. An APP spokesman said that all the pulp and paper production lines in Zhanbei province have resumed operations, and the pulp production losses have reached about 40,000 tons. A large Brazilian producer acknowledged that Chinese customers are being squeezed by higher pulp costs and lower paper and board prices due by overcapacity."At the end of last year, everyone predicted that BHK prices would fall this year, as new production capacity came online in South America both last year and this year. Not only Chinese factories and traders, but also South American producers, including us, are destocking, " he said."However, pulp demand in North America and Europe began to recover in January, and these regions are up much more than in China," he added."The uptrend continues, leading to South American BHK net prices at least $100 / ton higher than China. At the same time, producer pulp stocks have been low due to strong demand in both regions, " he said. Another Brazilian supplier also agreed, saying the transport delays and tight BHK supplies were due to excessive inventory backlog by producers."We used bulk carriers to ship the BHK to China, and the delivery was not affected by the Red Sea crisis," said the second Brazilian producer contact person."But we have a large backlog of orders to clean up, and [and] our Brazilian factory can't keep up with orders, which leads to delivery delays. He added: " Several times, when bulk carriers arrived at the loading port, we were not ready and had to let empty ships anchor at the dock for more than 10 days.”

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