SunSirs: Sustained Decline in China Wood Pulp Prices, or Short-term Weak Consolidation

According to the monitoring of the commodity market analysis system of SunSirs, the prices of softwood pulp and broadleaf wood pulp were significantly reduced last week. On November 24th, the average market price of softwood pulp in Shandong was 5,980 RMB/ton, a decrease of 2.76% compared to the average price of 6,150 RMB/ton on November 19th. On November 24th, the average market price of broad-leaved wood pulp in Shandong was 5,388 RMB/ton, a decrease of 1.14% compared to the average price of 5,450 RMB/ton on November 19th.

By observing market changes, it can be seen that the spot prices of softwood pulp and hardwood pulp continued to decline from high levels last week, while the futures prices of pulp also continued to decline. In terms of supply, domestic port inventory showed a cumulative trend last week, with mainstream port sample inventory of 1.928 million tons, an increase of 11.3% compared to the previous period, which significantly increased the supply volume. However, the USD quotation for external wood pulp remains strong, and the import cost of pulp continues to remain high.

In terms of demand, the current market trend is not clear, and the enthusiasm of downstream paper mills to start production has declined. The market's procurement enthusiasm is not high, and there are preferential and profit giving actions in some transactions. Affected by the mentality of buying up instead of buying down, new orders have not been trading well recently. Although there have been frequent price increase letters for downstream cultural paper recently, there is still a lack of market demand.

In terms of futures, on November 24th, the opening price of the SP2401 pulp futures contract on the Shanghai Futures Exchange was 5,760 RMB/ton, the highest price was 5,854 RMB/ton, and the closing price was 5,836 RMB/ton, with a daily increase of 0.97%. The trading volume was 388,800 lots, and the position was 219,999 lots.

The prices of downstream white cardboard and gray background white cardboard have remained stable. On November 24th, the average market price of white cardboard 230g-400g was 5,240 RMB/ton, while the average market price of gray background white cardboard 250g was 4,165.67 RMB/ton. Last week, there was a price increase letter released in the white cardboard market, so the market is observing the implementation of the price increase, and the prices of traders are temporarily stable. The gray background whiteboard market is mostly in the early stage of digesting the rising prices, and terminal demand has always been insufficient. Downstream purchasing enthusiasm is not high, and prices are temporarily stable and wait-and-see.

SunSirs Wood Pulp Analysts believe that the current supply of wood pulp in the market has returned to normal levels, but the weak domestic downstream demand has led to weak pulp prices. It is expected that the spot prices of wood pulp will continue to be weak in the short term.

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