SunSirs: Weak Downward Trend in China Wood Pulp Prices, Short-term or Under Pressure

https://www.chemnet.com   Jul 15,2024 SunSirs

According to the monitoring of the Commodity Market Analysis System of SunSirs, the prices of softwood pulp and hardwood pulp have maintained a downward trend this week. On July 12th, the average market price of softwood pulp in Shandong Province was 6,160 RMB/ton, a decrease of 1.16% compared to the average price of 6,232 RMB/ton on July 7th. On July 12th, the average market price of hardwood pulp in Shandong Province was 5,220 RMB/ton, a decrease of 3.69% compared to the average price of 5,420 RMB/ton on July 7th.

On the supply side: The market is affected by sudden disturbances and the rebound of demand from the United States and Europe, leading to downward expectations for overseas pulp shipments. Although there has been a slight loosening in external quotations, they are still at a high level, providing support for domestic spot prices. Domestic industry sentiment is mainly wait-and-see. In addition, the impact of the newly added production capacity of broad-leaved wood pulp in the early stage has brought supply pressure to the market, and the trading of broad-leaved wood pulp is clearly weak.

On the demand side: Due to entering the traditional off-season and weak consumer confidence, paper mills face cost pressures, leading to a bearish mentality among operators and an increase in downtime and maintenance of paper machines. Therefore, the market mainly purchases on demand, which has a drag on pulp consumption. The production of the four major types of finished paper downstream of pulp continues to decline, dragging down pulp prices due to demand.

Domestic port data: Currently, the enthusiasm of industry players for purchasing and hoarding goods is not high, and they tend to rely on rigid demand for goods, resulting in limited acceleration of pulp consumption. As of July 11, 2024, the sample inventory of China's mainstream pulp ports was 1.64 million tons, an increase of 0.7% compared to the previous period. The inventory showed a trend of accumulation this week, and the turnover of the port's inventory after two consecutive weeks of destocking was a trend of accumulation.

In terms of futures, the price of wood pulp futures initially weakened and then rebounded slightly. On July 12th, the opening price of the main contract SP2409 for pulp futures on the Shanghai Futures Exchange was 5,730 RMB/ton, the closing price was 5,748 RMB/ton, and the highest price was 5,768 RMB/ton, with a daily increase of 0.88%. The trading volume was 213,000 lots, and the position was 241,590 lots.

The wood pulp analyst from SunSirs believes that the current market is affected by the general trading of downstream manufacturers and the atmosphere of urgent demand for goods. The spot price of wood pulp continues to weaken, and the tight supply support still exists, which also leads to a continuous stalemate in the supply and demand of pulp. It is expected that the spot price of wood pulp may be under pressure in the short term.

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