SunSirs: Wood Pulp Prices are Rising strongly, with Short-term High Range Consolidation

According to the monitoring of the commodity market analysis system of SunSirs, prices of softwood pulp and hardwood pulp continued to rise strongly last week. On March 22, 2024, the average market price of softwood pulp in Shandong was 6,262 RMB/ton, an increase of 2.09% compared to the average price of 6,134 RMB/ton on March 17. On March 22, the average market price of broad-leaved wood pulp in Shandong was 5,570 RMB/ton, an increase of 1.64% compared to the average price of 5,480 RMB/ton on March 17.

By observing market changes, it can be seen that the spot price of wood pulp showed a strong upward trend last week. In terms of supply, the strike in Finland has continued to disrupt the market supply, leading to a decrease in the quantity of pulp shipped to China. Coupled with a decrease in the volume of broadleaf pulp exported from Brazil to China, the domestic wood pulp spot market is facing a shortage of circulating goods. Recently, a new round of pricing for hardwood has increased, which has led to lower prices for coniferous and hardwood and has driven up prices for coniferous leaves.

As of March 21, 2024, the inventory of mainstream pulp ports in China was 1.972 million tons, a decrease of 1.9% from the previous period, and the inventory showed a trend of destocking for four consecutive weeks.

In terms of demand, the current downstream industry is relatively peak season, and paper mill orders support the demand for wood pulp. Recently, cultural paper and specialty paper manufacturers have shown high market purchasing enthusiasm due to a slight need to replenish inventory due to insufficient raw material inventory. Due to the slightly slower increase in raw paper prices compared to pulp prices and lower profits, procurement is mainly focused on replenishing stocks in small quantities as needed. From the perspective of the inventory status of the entire downstream raw paper manufacturer, the existing demand for pulp has a certain supporting effect on pulp prices.

In terms of futures, last week's pulp futures prices experienced a slight fluctuation and correction after a continuous sharp rise. On March 22, 2024, the main contract of SP2405 pulp futures on the Shanghai Futures Exchange opened at 6,184 RMB/ton, closed at 6,184 RMB/ton, and the highest price was 6,216 RMB/ton, with a daily decline of 0.03%. The trading volume was 305,400 lots, and the position was 215,041 lots.

SunSirs Wood Pulp Analysts believe that the recent peak season for the cultural paper market is favorable for the increase in pulp demand as the industry's operating rate increases. The low inventory in the paper mill and the slight decline in overseas imports have had a favorable effect on the upward trend of pulp prices. It is expected that the spot price of wood pulp may be in a high range for consolidation in the short term.

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