Wood Chip Market Lacks Upward Momentum Without Bullish Factors
Since H2 of 2024, the supply of wood chips in China has remained stable, and the demand in the pulp market was insufficient. With slow wood chip consumption, the inventory was high at most pulp mills, and the wood chip purchase price fell constantly. In Q1 of 2025, the wood chip price did not rebound notably, and pulp mills made basic purchases. It is estimated that the wood chip price will remain range-bound in the short term.
Chinese-made wood chip prices headed down
As of March 12, the monthly average poplar chip purchase price remained stable at RMB 1,136/mt, while that of pine chine went down to RMB 981/mt. The market trading for wood chips was lukewarm, and pulp mills adjusted their procurement pace based on pulp production.
On the demand side, the wood pulp production remained low after Q4 of 2024 after the shutdown of a major integrated player in China. In February 2025, the industry operating rate and output continued to drop due to the Spring Festival holiday. As of late February, the domestic HWP operating rate was 60%, down 2pp MoM, and that of CMP was 70%, down 1pp MoM. The low pulp operating rate restricted wood chip consumption. Besides, paper mills were cautious about pulp procurement, and the market trading was done on a need-to basis. Therefore, the wood chip demand was also suppressed.
On the supply side, the wood chip supply has remained stable in China, and the shutdown of a major integrated player has reduced the competition for wood chips. With abundant market supply, other pulp mills purchased based on their own demand.
Wood chip prices continue to suffer downward pressure
In March, paper mills may still face weak profits. Despite continuous price hike attempts by paper mills, the implementation was poor. As a result, paper mills hold a cautious sentiment about pulp procurement. With sluggish sales, domestic market pulp producers show limited interest in wood chip purchases. However, because March is in the traditional demand peak season of the pulp and paper industry. The publishing tenders in the cultural printing paper market and post-holiday restocking in the tissue and packaging paper markets will likely improve the prospect of the pulp and paper market, which may provide support to wood chip demand, but the wood chip price is still restricted by abundant supply. Therefore, unless the major integrated player restarts production effectively, the wood chip market may still face short-term downward pressure.
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