Analysis of the Pulp Market in April

May 05, 2023

Import pulp spot market:
This month, the inventory days of major pulp producing countries around the world have increased, while demand in overseas European and American markets has not improved. In addition, European port inventory has once again accumulated at a high level in March, with a month on month increase of 2.9%. The new production capacity has been put into operation, and the external quotation has been fluctuating and reduced. The pressure on the supply side is showing, and the support for the pulp market is limited. In terms of domestic demand, domestic import volume has increased year-on-year, port inventory continues to accumulate, and market spot supply is sufficient. In addition, downstream paper companies continue to purchase in demand. Due to the continued short expectation of market trends in the later stage, manufacturers maintain a low inventory situation of raw materials with a buying up and not buying down mentality, and are about to enter the traditional off-season in May. The focus of transactions may continue to shift downward, and the expectation of further weakness in the future is relatively high.
This month, the transaction prices in the spot market continued to decline, and actual transactions can be negotiated based on the volume. The price of needle leaf pulp and the Shanghai Stock Exchange fluctuated and fell, hitting a new low of 5096 yuan/ton for the year. The mentality of buying or not falling has further affected market trading volume; Needle pulp refers to mainstream brands with quotes of 5200 yuan/ton (-750) for Silver Star, 5250-5300 yuan/ton (-850) for Moon and Marpai, 5000 yuan/ton (-650) for Russian pulp, and 5700 yuan/ton (-950) for Kailipu; The supply of broad-leaved pulp is sufficient in the market, and it is expected to continue to decline in the future. The reference quotation for goldfish and parrots in Shandong region is 3950 yuan/ton (-950), the second class broad-leaved pulp is 3800-3900 yuan/ton (-800 to -850), and the quotation for goldfish and parrots in East China is 4000 yuan/ton (-1100); Natural color paste, the market demand for natural color paste is light, and the delivery is not warm or hot. The reference quotation for Venus is 5150 yuan/ton (-500), while Tiangong and Dolphin are 4500 yuan/ton (-200); Chemical pulp, mainly delivered by imported chemical pulp manufacturers, with a reference price of 4300 yuan/ton (-650) for Kunhe in Shandong region and 4500 yuan/ton for Kunhe in the East China market, resulting in a shortage of current stock.
Overview of the domestic waste paper market:
This month, there was a slight decline in the price of waste yellow cardboard in China. At the beginning of the month, with the finished paper market, demand pressure began to show. Due to the lower than expected demand for finished paper, paper companies took the lead in lowering the price of waste yellow board paper in order to repair profits. Market demand is gradually recovering, and dealers are gradually restocking. However, due to the lower than expected recovery of terminal demand, paper companies have also started a pattern of declining finished paper prices in order to reduce finished paper inventory. In the middle of the month, the demand for finished paper fell short of expectations, and paper mills strongly drove up the price of finished paper. After the supply of waste yellow board paper returned to normal, the price of waste paper also increased. At the end of the month, approaching the May Day holiday, the national waste paper market still showed bottom fluctuations and there was a hopeful sentiment. In April, the overall trend showed signs of bottom stabilization, with a basic rebound from 1500 yuan/ton to 1600 yuan/ton, showing certain bottom characteristics. Box corrugated paper is currently in the bottom consolidation stage, and the effective transformation of the Packaging Paper market has become a sensitive point affecting industry confidence.

This month, due to the fluctuation of wood pulp raw materials, the price of waste white paper continued to decline slightly, with a decrease of 50-150 yuan/ton compared to last month; The price trend of pure newspapers is weak. At present, the reference price for waste book pages is about 1600-2100 yuan/ton, and the reference price for waste newspapers is 2600-2900 yuan/ton.
Overview of the domestic packaging paper market:
This month, the white cardboard market continued to decline, with overall trading light. As of April 26th, the average monthly transaction price including tax in the 250-400g flat white cardboard market was 4691 yuan/ton, a decrease of 5.39% compared to the previous month, an increase of 0.97 percentage points compared to the previous month, and a decrease of 27.03% compared to the same period last year. By the end of the month, the mainstream market price range is 4500-4800 yuan/ton.
The reasons that affect the price trend this month include: firstly, insufficient market demand, stable and slightly lower orders from downstream printing and packaging factories, and delayed procurement progress; Secondly, traders have high inventory and lack confidence in the future market, with price reductions and order promotions being the main focus; Thirdly, there is an oversupply, which puts pressure on the production and sales of enterprises and results in flexible prices; Fourthly, raw material prices continue to decline, weakening cost support, and increasing downstream pressure on prices.
Forecast: It is expected that the price center of the white cardboard market will be lower in May. In the off-season of industry demand, there is a possibility of a contraction in market orders in May, while the Fujian region's annual production capacity of 1 million tons is planned to be put into production on May 1st. The market supply and demand pressure is expected to increase. In the context of the continued decline in raw material pulp prices, there is a possibility of exchanging price for quantity in the market, and there is a significant risk of a downward trend in paper prices. However, the continuous inverted market price is not conducive to the return of the rational operation of the industry. Scale enterprises have the intention of stabilizing prices, which has played a certain role in slowing down the market price decline. It is expected that the average market price fluctuation range in May may be 4500-4650 yuan/ton. From June to July, the market trend may first decline and then slightly rebound, with an expected average price fluctuation range of 4300-4500 yuan/ton, mainly affected by the continuation of the off-season demand and the continuous release of production capacity. With the release of orders for festivals such as the Mid Autumn Festival, there is a slight upward opportunity in the market in mid to late July.

Author:

Mr. Ma Yanfeng

E-mail:

sandy@zhongzhi.cn

Phone/WhatsApp:

8615200088110