2024 China pulp market in the first half of the review, the second half of the outlook

July 04, 2024

2024 China pulp market in the first half of the review, the second half of the outlook

 Original popular water tiger wei pulp paper 2024-07-02 15:41 Beijing

"The tide is flat and the two sides are wide, and the wind is hanging on a sail."Pulp market after twists and turns, the first half of the high price ups and downs, by the global supply and demand pattern significantly affected. With the release of new broad-leaved pulp capacity at home and abroad, the supply pattern will tend to be loose, as the river becomes wider and the waves flatten. Weak demand and the upside down of profits are also like the headwind blowing, testing the course of the market. Only by gaining insight into the trend and adapting to changes can we sail to a broader market.


 Review of China's pulp market in the first half of 2024

With the evolution of the global economy and trade pattern, the pulp market presents a complex and changeable price situation. In the first half of 2024, pulp prices experienced a shift from rising to fluctuating downward, reflecting the interweaving impact of multiple factors such as global supply constraints, production disruptions, downstream market profitability and international trade.

1. Pulp price trend and cause analysis in the first half of 2024

In the first half of 2024, the price of pulp shows a complex fluctuation trend, and the overall trend is rising first and then suppressing. Specifically, pulp prices rose in the first quarter due to global supply constraints, sudden factors in international supply countries (such as work breaks, explosions, etc.) and strikes by workers at Finnish ports. However, as the second quarter of the international market continuous quote in Finland, Chile, Canada union off work and pulp factory maintenance news, although in the short term increased the market uncertainty, but in the long run, as the enterprise maintenance gradually recover, market supply increase, and the downstream base paper market earnings performance, lead to pulp market trading atmosphere, pulp prices from late may to late June presents shock downward stage.


2. Supply-side situation analysis

On the supply side, the output and price of the main pulp producing countries in the world show their own characteristics. Among them, Brazil Suzano announced that its 2.55 million tons of broad-leaved pulp project is in the final commissioning stage, and the start of the new project is tentatively postponed to the end of July, which has brought certain uncertainty to the global broad-leaved pulp market supply. At the same time, due to the continuous production interruptions in Finland, Chile, Canada and other countries, the supply of paper pulp was reduced in the short term, thus affecting the international market price. In addition, as the world's largest pulp consumer, China's pulp imports also showed an increasing trend, and it is expected that China's pulp import volume is expected to increase to 29.8 million tons in 2024.

3. Demand-side situation analysis

On the demand side, changes in the European market demand have had an important impact on the global pulp market. The eurozone economy may turn an inflection point in the first half of the year, and the previous issuance of Chinese pulp to ease inventory pressure is expected to be reduced for domestic use, so the amount of Chinese shipments throughout the year tends to be normal, with a small increase. In the domestic market, March and April are usually the peak season for the pulp industry, and the demand is relatively strong. However, after entering May and June, due to the poor profitability of the downstream base paper market, the pulp demand is depressed, which affects the market price.

4. Price comparison and influencing factors of pulp at home and abroad

The comparison of pulp prices at home and abroad shows that, influenced by a variety of factors, there is a big difference in pulp prices at home and abroad. On the one hand, the domestic pulp production cost is relatively high, coupled with the high import dependence, resulting in the domestic pulp price is generally higher than the international market. On the other hand, the international market price is affected by various factors such as global supply and demand situation, international sea exchange rate and sea freight, and the price fluctuates greatly. Therefore, the comparison of pulp prices at home and abroad reflects the changing trend of pulp prices in different market environments.



Market outlook for the second half of 2024

1. Changes in the supply pattern

 With the deep adjustment of the global wood pulp market, the second half of 2024 is expected to usher in a significant easing of supply. First, the expansion of production capacity in overseas markets deserves our attention. Up to 2.9 million tons of new broad-leaved pulp capacity is expected to expand overseas in the second half of the year, mainly in Brazil and Vietnam. Of these, the 2.55 million tonnes of production capacity is expected to be operational in July and August, while the VNT 19 plant in Vietnam will add 350,000 tonnes of broad-leaved pulp capacity in the fourth quarter. Meanwhile, Kami's biological products factory, which stopped production in the first half of the explosion, resumed production on June 20, adding more supply vitality to the market.

 In the domestic market, the wood pulp production capacity is also rapid. It is expected that in the second half of the year, 6.4 million tons of broad-leaved pulp and chemical pulp capacity will be added, among which major enterprises such as Huatai, Nine Dragons and Liansheng will successively release their capacity. This part of the capacity is mostly raw materials for supporting paper mills, and the quantity of commodity pulp directly facing the market is relatively small, but overall, the domestic pulp supply will show a loose situation.

From the import level, it is expected that China's pulp imports will recover in the second half of the year. The growth of pulp demand in Europe is weak, which is difficult to support the high price of overseas pulp factories. The repair of pulp imports will relieve the supply pressure in the domestic market to a certain extent.


2. Demand trend analysis

 In the second half of 2024, it is expected to show a steady and downward trend. Domestically, with the gradual saturation of capacity, the actual demand growth of finished paper is lower than the capacity. At the same time, the profit situation and utilization rate of small and medium-sized paper enterprises further decline, which will have a certain inhibitory effect on the demand for pulp. Overseas, the Fed's high interest rate policy and manufacturing weakness in the euro zone have made it difficult for pulp demand in Europe and the U. S. to maintain its high levels in the first half of the year.

In 2024, the total production capacity of major wood pulp paper in China is expected to reach about 5.4 million tons, including 1.5 million tons of cultural paper, 1.7 million tons of living paper and 2.2 million tons of white paper. However, with full production capacity by the end of the year, the market will face a serious overcapacity problem. In order to absorb this part of the capacity, expanding direct or indirect (including printing package) exports will become the inevitable choice. By the end of 2024, the capacity utilization rate of double adhesive paper, coated paper, household paper and white card paper will reach about 63%, 79%, 52% and 62% respectively.

3. Inventory and market dynamics

In terms of inventory, the current inventory of domestic pulp mainstream ports is at the median level, at about 1.711 million tons. According to PPPC statistics, the 20 countries stand for 38 days and bleached hardwood pulp for 47 days. Although the overall inventory level is moderate, the structural shortage of high-quality conifer pulp still can not be ignored.



 Second half of the market outlook

 Looking ahead to the second half of 2024, the wood pulp market seems to present a complex picture of interwoven supply and demand. On the supply side, the easing situation indicates increased competition in the market, while the weak demand poses considerable challenges for market participants. In this context, it is particularly critical to accurately grasp the market dynamics and flexibly adjust the business strategy.

 The wind direction of the market is not only directly affected by the supply and demand relationship, but also affected by the potential traction of multiple factors such as policy adjustment and technological innovation. At present, the inverted phenomenon of pulp import profit and the resistance of traders to high quotation all imply the instability and uncertainty of the market. And the needle wide spread in the relatively low hovering, but also for the future market changes buried the foreshadowing.

 With the gradual expansion of broad-leaved pulp capacity and the relative contraction of needle-leaved pulp capacity, the price difference has a trend of further expansion. Especially due to economic reasons, with the weak demand for pulp in Europe, overseas pulp factories may face price reduction pressure, which will further affect the pattern of the global wood pulp market.

 Coniferous pulp, which mainly originated in Canada, is frequently affected by the shortage of raw material supply, and the supply shrinks, which undoubtedly adds more variables to the coniferous pulp market.

In the complex and changeable market environment, we should not only pay attention to the short-term price fluctuations, but also examine the development trend of the market from a long-term perspective.In July, pulp prices may fall due to the low demand season. In the second half of the year, the Federal Reserve's monetary policy and the domestic demand for "gold nine silver ten" will be the key factors to determine the direction of the market.


4. conclusion and suggestion

In the first half of 2024, the pulp market experienced a high fluctuation of first falling, then rising and then falling. The supply side and the demand side factors jointly affected the trend of the pulp price. In the second half of the year, the pulp market supply and demand pattern will change to some extent, but the overall trend will still remain wide shock. For the pulp market participants, it is necessary to pay close attention to the changes of the international political and economic situation, industrial policy adjustment and market supply and demand changes and other factors, and formulate reasonable business strategies according to their own actual situation.


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