Price trend

According to data monitoring by SunSirs, the prices of softwood pulp and hardwood pulp continued to decline significantly in March. As of March 31, the average market price of softwood pulp in Shandong Province was 6,120 RMB/ton, a decrease of 12.2% compared to the average price of 6,970 RMB/ton on March 1. On March 31, the average market price of hardwood pulp in Shandong Province was 5,080 RMB/ton, a decrease of 13.16% compared to the average price of 5,850 RMB/ton on March 1.

Analysis review

According to the observation of market changes, the price decline in the wood pulp market in March became increasingly severe, and the pulp futures price also continued to decline. In terms of supply, due to the economic downturn in overseas markets, pulp was in a state of oversupply, leading to the majority of pulp flowing to the domestic market, and domestic port inventory continued to accumulate. From January to February 2023, the cumulative import volume of pulp was 5.509 million tons, a year-on-year increase of 4.7%. Arauco's 1.56 million tons new capacity of hardwood pulp had already been put into production, and 2.1 million tons new capacity of UPM hardwood pulp were expected to be put into production by the end of the first quarter. The release of hardwood pulp capacity had a drag on the price of softwood pulp.

On the demand side, as of the 31st, the domestic economic recovery was still slow, and the purchasing sentiment of downstream base paper manufacturers was pessimistic. The trading situation in the spot pulp market was general, and the sentiment of the industry entering the market was weak, most of them executed the contract orders. The pace of market shipments was slow, and the starting load of downstream base paper enterprises had slightly increased, but most of them focused on purchasing cheap domestic wood pulp. In a state of insufficient confidence in the futures and spot markets, market pessimism was high, leading to price falls and falls.

In terms of futures, on March 31, the opening price of the Shanghai Stock Exchange pulp futures contract SP2305 was 5,694 RMB/ton, and the latest price was 5,580 RMB/ton. The daily price decline was 2.17%, with 259,300 transactions and 141,916 positions.

Market outlook

According to wood pulp analysts from SunSirs, as of the 31st, the release rate of new overseas hardwood pulp production capacity had accelerated, inventory accumulation in European ports had accelerated, and overseas demand continued to weaken under the current macro environment. The domestic downstream demand for finished paper shipments was general, with insufficient consumption of wood pulp raw materials and limited support for wood pulp prices. It is expected that the spot price of wood pulp will continue to decline in the short term.

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