Tissue Rebound Faces Obstacles Despite Eased Tariff Tensions
Introduction: In April 2025, the rapid escalation of the tariff disputes between China and the US led to a decline in China’s tissue exports, which put additional downward pressure on tissue prices. In May, the preliminary agreement between China and the US boosted export orders somewhat, and the tissue exports may continue to recover in June. However, given limited support from other factors, the tissue price is still likely to hover at lows.
Tissue exports declined in April, notably to the US
Tissue exports totaled 131.0 thousand mt in April, down 1.91% MoM, with a pronounced YoY decrease in shipments to the US. In April, the US implemented "reciprocal tariffs" on multiple countries citing goals to reduce trade deficits, enhance competitive advantages, and strengthen national economic security. Subsequently, the tariff conflicts between China and the US intensified rapidly, with US tariffs on Chinese goods temporarily rising to 145%. Some exporters suspended order deliveries and export negotiations, leading to a 26.10% MoM and 22.06% YoY drop in US-bound exports to 11.5kt. This marked the first decline after consecutive YoY growth from 2021 to 2024. Reduced exports and bearish market sentiment from tariff tensions weighed on tissue prices, with the monthly tax-inclusive average price falling 3.54% MoM to RMB 5,954/mt in April. On May 12, both sides agreed to remove 91% of additional tariffs and suspend 24% of tariffs within 90 days. As a result, the tissue market sentiment gradually stabilized, with some mills reporting increased export orders. However, lingering bearish factors and persistent oversupply continued to pressure prices. As of May late May, the monthly tax-inclusive average tissue price stood at RMB 5,745/mt, down 3.51% from April.
Export recovery brings limited support to tissue market
Despite the tariff easing and a 90-day window period, market concerns over future uncertainties persist. However, some mills accelerated exports during this window, with orders reportedly scheduled through June. Improved export orders and temporarily eased trade tensions have provided modest positive guidance for the tissue market. Additionally, stock replenishment before the mid-year shopping fest have slightly boosted finished product orders, increasing favorable factors.
Nevertheless, tissue mills maintain stable operating rates with ample supply and high inventory pressure, sustaining bearish influences. Newly added capacity totaling 250kt is expected to come online in May and June, maintaining supply-side pressure on prices.
Supported by improved macroeconomic sentiment, traders show strong willingness to reduce losses, while wood pulp market participants generally maintain stable pricing. Upstream pulp prices may experience limited fluctuations in the short term.
Considering supply, demand, and cost drivers, the tissue market is expected to see modest supply-demand improvements. However, current bullish factors may be insufficient to support sustainable price increases. Thus, tissue prices will likely to hoer at low levels in June.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
