The Global Pulp Supply Shortage Has Eased In 2023?

Feb 17, 2023

In 2023, UPM of Finland and Arauco of Chile will expand their production capacity, which will add nearly 4 million tons to the global pulp market and alleviate the global pulp supply shortage to some degree. At the same time, the domestic paper mills did not wait for the price reduction, but actively seek a variety of supply ways. The domestic social pulp inventory has increased significantly, and the bargaining power of international suppliers has increased. In addition, recently, Nine Dragons Paper (7.02, 0.07, 1.01%), Bohui Paper, Chenming Paper (2.74, 0.05, 1.86%) and other paper companies have issued price hike letters, from February 15, the price of white card paper will increase by 100 yuan/ton.

As for the reasons for the price rise of white card paper, Bohui Paper investor relations department said, there are cost reasons, but also market demand reasons. With the industry expecting massive price increases in March.This round of price hike letters from paper companies is more like a tentative price increase before the peak season. In this regard, Bohai Securities research report pointed out that with the gradual landing of the price letter of white card enterprises, under the trend of slight downward price reduction, the profit margin improvement of white card enterprises has a high certainty.

Looking back over the past year, pulp futures prices remain high, the cost of some paper enterprises. According to relevant data, Suzano, the world's largest pulp producer and exporter, saw its chemical and wood chip costs rise 41% and 19% respectively in the third quarter from a year earlier.

The domestic paper industry has experienced a year of decline from the most brilliant moment in December 2021. According to the data of the National Bureau of Statistics, from January to November 2022, the operating revenue of paper and paper products enterprises above designated size was 1.7652 billion yuan, up 1.2% year on year. The operating cost was 1216.86 billion yuan, up 4.1% year on year, and the total profit was 47.8 billion yuan, down 38.6% year on year. By November 2022, the number of loss-making paper and paper products unit enterprises was 1,936, up 37.5 percent year on year. The number of losses hit the highest in nearly three years. Even so, analysts do not believe Suzano's price cuts on its eucalyptus pulp are a sign that times are tough for pulp companies.

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