Pulp Market Review in 2022 and Outlook in 2023

A review of the spot market for pulp in 2022

In the long run, pulp prices are highly correlated with the global economy, and the cyclical demand for household paper and cultural paper in the terminal demand is weaker than that of other industrial products, whether it is the sharp fall in 2008, or the sharp rise in 2010 or 2017, behind the supply interference, and the price "outlier" duration is relatively short. The period from 2008 to 2022 is mainly divided into the following stages:

In 2022, pulp price operation is mainly divided into three stages:

The first stage: the first quarter of the domestic pulp continued the upward trend that began in the late fourth quarter of last year, the supply problem continued to ferment, the UPM strike continued to extend, the Canadian transportation failed to recover quickly, the import volume of Chinese conifolia pulp fell to the lowest level in the past year, the domestic macro sentiment was better, the expectation of economic repair was strong, and the pulp price rose smoothly to a historical high.

The second stage: from the beginning of the second quarter, with the impact of domestic public health events increasing again, market sentiment has changed, the economic growth target has gradually weakened, the pulp itself still has supply problems, overseas shipments have failed to recover, but under the influence of weak macro expectations, the pulp is still a round of sharp adjustment with the commodity as a whole.

The third stage: In the third quarter, after the sharp decline, due to the continuous supply shortage, the quantity of warehouse receipts decreased significantly, the US dollar quotation of pulp remained high, the RMB exchange rate also fell sharply, the import cost of conifer pulp increased, and the discount in the futures market was too large, so as the main contract delivery approached, the futures began to repair the discount, but under the overall impact of overseas interest rate hikes and domestic public health events, Market optimism is not in, suppressing pulp rebound space, prices failed to return to the first half of the high.

Second, the global supply of coniferous pulp is relatively tight

From January to November 2022, China's pulp imports were 26.81 million tons, a year-on-year decrease of 3.5%, and imports in 2021 were reduced by 3.0%. Imports have fallen for two consecutive years, and the reduction is mainly due to the contribution of coniferous pulp. From January to October, China's imports of bleachwood pulp were 5.93 million tons, a year-on-year decrease of 17%, and imports of bleachwood pulp were 10.73 million tons, an increase of 2%. Total imports of needle and broadleaf pulp decreased by 5.6% year-on-year, and imports of other pulp increased by 2%.

China's imports of coniferous pulp from Canada decreased more, down 27% in the first three quarters of the year, as of the fourth quarter has not yet returned to the normal level of the calendar year, Finland after a long-term shutdown in the first half of the year, exports to China have a certain decline, down 17%, from the volume point of view in September has rebounded, Chile's exports to China are relatively stable. In the first three quarters, the export volume of the United States fell sharply in the first half of the year, the third quarter turned positive, Russia coniferous pulp in the second quarter also appeared to reduce the supply of China, the arrival of the third quarter has rebounded, the cumulative reduction of 8% from January to September, so China's main source of coniferous pulp imports more than a year on year decline, which Canada is more serious. The recovery situation in 2023 is relatively critical, and from the current point of view of North American rail transportation, there has not been a significant improvement. Broad leaf pulp supply throughout the year is more abundant, Brazil, as a major importer of China, from January to September exports to China increased by 20%, other countries have some reduction but overall stability.

In terms of global commercial wood pulp shipments, according to the Pulp and Paper Products Council (PPPC) data, from January to October 2022, the total pulp shipments of the world's top 20 major pulp producing countries (W-20) increased by 3.7% year-on-year, of which coniferous wood pulp shipments were 18.71 million tons, down 1.8% year-on-year, and bleaching wood pulp shipments were 23.74 million tons. That's up 7.8% from a year ago. Shipments to the Chinese market were 13.47 million tons, a year-on-year decrease of 0.54%, shipments to Western Europe and North America were 17.63 million tons, a year-on-year increase of 4.1%, the proportion of Chinese market demand was near 30%, a slight decline compared with 2021, and a decline of about 3% compared with 2020 and before, under the role of high inflation overseas and weak domestic demand. The price difference between Chinese softwood pulp and Western Europe fell, and broadleaf pulp was lower than Western Europe, resulting in a regional tilt in market shipments.

Third, the supply of raw materials is reduced and the cost is shifted