Jul Uncoated Woodfree Paper Market Forecast
Introduction: In June, the uncoated woodfree paper market continued its downward trend, with limited recovery in downstream demand and a weak market. The pick-up of publishing orders is expected to support the market in July, and shipments are likely to improve at paper mills. However, pressure on the supply side persists due to imminent new capacity expansion. Key factors affecting July prices include the progress of procurement for educational materials, the timeline for new capacity launches, offer updates from large-scale paper mills, and wood pulp price trends.
The uncoated woodfree paper market maintained a downward trajectory in June. Although paper mills proposed price hikes in early June, macroeconomic support failed to materialize, and orders from downstream printers showed no significant recovery, limiting price increases. As the broader market demand remained sluggish, with moderate publishing demand and tepid commercial orders. By late June, the tax-inclusive average price for 70g high-whiteness uncoated woodfree paper stood at RMB 5,125/mt, down 0.73% MoM from late May. The price for 70g off-white grade was RMB 4,795/mt, down 1.64% MoM.
The uncoated woodfree paper market is expected to see both bullish and bearish factors, and market players are advised to pay attention to the following aspects:
Pick-up of publishing orders: Historically, the pick-up for paper used in the autumn semester textbook and material printing occurs between late June and July. Market feedback indicates some downstream pick-up activity began in late June, but volume growth is expected mainly in July. Increased volume pick-up should boost paper mills’ shipments and lower inventory pressure. However, as printing plants start production later in July, new demand will likely diminish. Downstream focus will shift to printing educational materials, causing uncoated woodfree paper demand to rise initially, then fade, providing temporary price support.
New capacity expansion: Previously, a total of 500kt/a of new capacity has been launched in Central China, and the operating rate is expected to ramp up to normal levels with the increase of pulp materials. Also, some new paper capacity in South China is expected to start in July, which may aggravate competition in the uncoated woodfree paper market. Considering that some paper mills are suffering inventory pressure, there have been more downtimes in East China, and attention should be paid to the restart schedules.
Offer updates from paper mills: Currently, the paper price is at a two-year low level with poor production profits, but under market pressure, the price adjustment space may be limited. It is estimated that the offer may be held stable for July, with negotiable dealing prices.
Wood pulp price trend: With the launch of new HWP capacity in July, the pulp market supply may become increasingly abundant. However, considering the operating losses for imported pulp, the price drop may be limited. So, the cost factor may lend no apparent support to uncoated woodfree paper.
Market Sentiment: On June 25, the Shanghai Futures Exchange posted an announcement on the planned listing of offset printing paper futures and options. Frequent paper price volatility has heightened market expectations that these derivatives will meet risk management needs in China. The anticipated listing of offset printing paper futures will add financial attributes to the market and affect spot price trends.
In conclusion, the supply and demand are both expected to increase in July, but the market may still be oversupplied. In H1 of July, the market may go sideways, supported by essential demand, but as volume pick-up by publishers comes to an end, the fundamentals may turn bearish, leading to potential drops in paper prices.
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