State Council’s New Logistic Policy Benefits the Pulp Industry
On March 3, Li Keqiang, premier of the State Council hosted an executive meeting aiming to coordinate and improve the efforts promoting the stable performance of the society and economy. Several measures were taken in order to support the logistics and delivery system,
The second measure states that the port construction fee will be free of charge, and the cargo dues and port facility security charge will be deducted by 20% till the end of June. This policy will certainly bring down the cost pressure of pulp import traders. Port staff suggests under such standard, the cost of pulp import will be reduced by RMB 6.2/mt. However, market participants still hold a wait-and-see sentiment as the detailed execution plan remains unpublished.
SCI data suggests China’s pulp inventory has been at a high level since the outbreak of the public health emergency. In February, the pulp inventory climb by 3.76% on average every week. By late February, the combined inventory in Qingdao, Changshu, Baoding and Gaolan was 2,290kt, up 28% M-O-M and 10% Y-O-Y.
In early March, the pulp inventory at major ports and regions increased by 0.36% from late February, and the slow decrease was affected by the intensive shipment arrivals at ports in Southern China. The pulp inventory in Northern China decreased steadily. In Qingdao, the inventory dropped by 4%, and that in Baoding decreased by 20%. The pick-up rate at ports resumed normal, and that in Qingdao and Changshu was especially fast.
By late February, resumption schedules were still delayed at some downstream producers, especially at those in Hubei. The operating rates were restricted at paper mills that had resumed operational. 320kt of pulp consumption was delayed due to the incident in February, but as new policies being promulgated, the pulp consumption will accelerate.
SCI suggests that the new policy regarding logistics and transportation will ease the cost pressure on every sector of the paper industry. As for the pulp market, it is expected that the pulp price will fluctuate sideways, mainly due to the high inventory level which suppresses the pulp price. In the later stage, the global public health event will have an impact on the pulp and paper industry, but news regarding mills being shutdown has not appeared at present. Participants are advised to pay attention to the turnover speed and pulp shipment arrivals. In January and February, the pulp import increased by 21.38% Y-O-Y. The pulp export from Brazil to China was 780kt in January, up significantly by 43% Y-O-Y, the volume decreased slightly in February, but it still increased significantly compared to the same period of last year. Thus, it is estimated that the HWP supply pressure will be in March. In April, the supply pressure may be relieved as the import volume starts to decrease, and the demand from downstream paper mills starts to recover.
Besides, Asia Symbol plans to take turnaround in April. The overseas pulp supply will also tighten due to several reasons such as the strike in Finland, turnarounds at Chilean producers, Catalyst in Canada and mills in Indonesia.
According to SCI, at present, the impact of the external factors at home and abroad, as well as the slowdown of international economic growth had affected the paper pulp consumption, There are risks of under-consumed pulp resources in other regions being redirected to China, In the short term, China has introduced several new logistics and tax reduction policies, which will speed up the recovery of China's pulp industry and promote the healthy and orderly development of China's paper industry.
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