Pulp supply and demand balance table analysis

1. Inventory situation

From the perspective of global stock changes of pulp in 2021, the supply is relatively loose for most of the time. As of October 2021, the global pulp inventory of producers rose from 35 days to 44 days, an increase of 5 days year-on-year, and the growth of coniferous pulp is larger, and the slowdown in Chinese demand is the main factor for the global inventory recovery. The apparent inventory of domestic ports changed little throughout the year, and the stock of wood pulp in several major ports at the beginning of the year was 1.74 million tons, and in November 2021 it was 1.88 million tons, an increase of 140,000 tons, an increase of 100,000 tons year-on-year. The biggest change in domestic inventory is the stock exchange, the amount of pulp warehouse receipts in the previous period rose from 50,000 tons at the beginning of the year to 446,000 tons in early December, an increase of nearly 400,000 tons, based on this calculation, China's wood pulp dominant inventory increased by 540,000 tons compared with the beginning of the year. Combined with the above, the total pulp imports in the first 11 months decreased by 360,000 tons, and the pulp demand calculated based on the sample data decreased by 900,000 tons, accounting for 3.2% of the imports in the first 11 months, and the invisible wood pulp inventory changes of the paper mill were not counted here. From the Bureau of Statistics monthly statistics of scale paper mill inventory data, the inventory of finished goods increased by 20% as of October compared with the beginning of the year, but after August began to reduce, the inventory of finished goods outside the increase of 9%, paper mill raw material inventory may also be rising.

As of October 2021, wood pulp stocks in European ports were 1.15 million tons, down 115,000 tons from the beginning of the year and down 316,000 tons year-on-year. Compared with 2019-2020, the current European pulp inventory has fallen sharply, falling to the lowest point in the past 5 years in the middle of the year, from the delivery situation, the first 10 months of 2021 to Western Europe pulp shipments increased by 3%, so the decline in inventory indicates that Western Europe pulp demand performance is better.

In the case of maintaining the current operating rate of domestic paper mills, if the import volume is flat or continues to decline, the domestic pulp inventory will continue to decline, considering the increase in the new production capacity of finished paper in 2022, the situation of insufficient supply in the paper industry is difficult to appear, so the profit change will continue to adjust the paper mill opening probability, and the paper mill start-up in 2021 or has reached its lowest point. The situation of extremely low construction in 2022 is not expected to occur, so the domestic pulp inventory is not expected to increase next year.

Second, supply and demand balance table analysis

The data is calculated based on the proportion of production capacity of sample enterprises. At the same time, the source and statistical caliber of different data may be different, which will also lead to the deviation of the final value.

From the perspective of the supply and demand of the wood pulp market in the past five years, the increase in finished paper production and the low increase in pulp imports in 2017 led to tight supply and rising prices in 2017. From 2018 to 2019, the import growth rate increased, the finished paper production growth slowed down, the pulp supply and demand gap narrowed, and the price fell, and in 2020, affected by the epidemic, the domestic demand weakened, the finished paper production was less affected by the epidemic, and it could still increase slightly, but the pulp imports were also high, the supply and demand situation changed, and the price returned to a historic low. Entering 2021, due to the impact of the demand for cultural paper, the output of paper mills fell sharply in the second half of the year, the demand for pulp fell, the annual demand recorded negative growth, the supply also slowed down, the imports of needle and broadleaf pulp declined year-on-year, reducing the supply pressure, and the price of pulp eventually rose slightly, but mainly affected by the sudden events at the end of the year, and its own demand changes have little relationship.

In 2022, domestic demand is likely to recover, but the education industry's "double reduction" policy on the demand for cultural paper is a long-term behavior, which will also make it difficult for the demand for double-adhesive paper and some coated paper to change too much, the demand for white cardboard is expected to rebound, household paper is stable and slightly increased, and after a large number of domestic paper production capacity, the supply of finished paper is relatively loose. This will also make its output affected by profits and shipments, the overall forecast wood pulp demand increase by 1.3%, supply due to the global decline in commodity pulp sent to China in 2020, it is expected that after the improvement of domestic demand in China, shipments will increase, the premise is that the supply of Canada, Russia and Finland is not continued to be affected, then the total supply of wood pulp in China will increase by 1.6%. Therefore, 2022 pulp is still loose, and the annual average price will not be higher than 2021, but changes in supply will have an impact on the pace of operation.

Iii. Summary and Outlook for 2022

In 2021, pulp prices rose and fell, basically flat throughout the year, and the rise in the first quarter and the fall in the third quarter are still the leading role of finished paper. The production capacity of finished paper is in the rising period, resulting in the profit level of paper mills is difficult to maintain a high level for a long time, and then stop production and maintenance after the profit falls sharply, resulting in a decline in pulp demand.

In 2022, the global supply of coniferous pulp has no large increase, the shipment of major exporting countries in the fourth quarter of 2021 is affected by external factors, and the duration is unknown, but the coniferous pulp sent to China by overseas producers in 2021 is significantly reduced, and imports are expected to rebound in 2022 with the recovery of the price difference between inside and outside. After the domestic policy to stabilize growth, domestic demand and investment are expected to stabilize, the epidemic will weaken after the optional consumption will improve, especially in the first half of the economic activity will be restored, the demand for finished paper is expected to improve, but the education industry "double reduction" policy and the weakening real estate trend, will make the total demand for finished paper difficult to increase. In addition, the continuous increase in paper production capacity will put pressure on the profits of paper mills, which will restrict the recovery space of paper mill opening and pulp demand.

Overall, the supply and demand of the pulp market in 2022 is still loose, and the annual average price has moved down to 5400 yuan/ton. Paper enterprises can combine the historical trend of pulp, buy insurance or stock below 5000 yuan. Traders are concerned about the early rise in the internal trading point, combined with their own long-term cost to lock in import profits.