SunSirs: The Price of Wood Pulp Declined in China in November due to the Decline of External Market and Weak Demand

According to the data monitoring of SunSirs, the prices of coniferous wood pulp and hardwood pulp showed a downward trend in November. As of November 29, the average market price of softwood pulp in Shandong was 7,330 RMB/ ton, down 2.01% compared with the average price of 7,480 RMB/ ton on November 1. On November 29, the average market price of hardwood pulp in Shandong was 6,590 RMB/ ton, down 2.37% compared with the average price of 6,750 RMB/ ton on November 1.

From the observation of market changes, the short-term supply of international pulp is expected to be tight at the beginning of November. Due to the maintenance plan of large-scale pulp enterprises, the supply of goods is relatively small, the quotation of superposed wood pulp on the outside market is lower, the logic of import cost support is loose, and the spot price of wood pulp is adjusted accordingly. Around the middle of November, the pulp import volume has improved month on month, but it is still weak year on year, and the import of needle pulp is still tight. The shipping volume of international mainstream regions gradually recovered in the late ten days, easing the tension of the pulp spot market, and then the domestic port stock of pulp was accumulated in a narrow range near the end of the month, leading to the pulp price pressure. However, the latest published price of pulp on the external market still fell, and the spot price of domestic wood pulp also fell.

In November, the downstream white card, double glue and coated paper started to show a YoY decline, and the demand was significantly hindered. Only the living paper and cultural paper showed an incremental performance. However, due to the low intention of receiving goods from the downstream, the paper mill's profit bearing initiative to replenish the warehouse was limited under the influence of high raw material prices. Consumption in the terminal market is sluggish, and downstream procurement is cautious. At present, the downstream paper enterprises are not enthusiastic about starting work, and their demand for pulp is relatively weak, so they maintain a rigid demand for procurement. Downstream paper enterprises continue to focus on digesting inventory, and the cost pressure has not been significantly relieved temporarily, and the acceptance of high priced wood pulp is limited.

Although the price of wood pulp showed a downward trend in November, the overall price was still at a relatively high level. The high price of wood pulp was driven by factors such as the expectation of slowing interest rate increase in the United States and the comprehensive ban on Russian crude oil in Europe and the United States in December, which promoted the international oil price to continue to rise and the overall strength of energy and chemical products. The National Standing Committee has a plan to reduce the reserve ratio, which improves the overall market sentiment and also supports the pulp price.

On November 29, the opening price of the main contract of the pulp futures SP2301 of the Shanghai Futures Exchange was 6,970 RMB/ ton, the latest price was 6,960 RMB/ ton, with a price drop of 0.74%, 178,900 deals and 148,740 open positions. At present, the pulp futures are weak due to shocks. Due to the logic of delivery month, the short-term position reduction of main contracts is obvious, and the action force on the market is temporarily insufficient.

SunSirs wood pulp analysts believe that the recent American Railway Association strike crisis is on the verge of breaking out and the Chilean port strike event is restarted again, and the market is again worried about the pulp supply. Although the domestic downstream demand is weak, the future market is still supported by the supply side and macro information. It is expected that the short-term rebound of spot price of wood pulp is limited in China, and most of them are in range shocks.

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