Implementation of HWP Hikes Draws Market Attention Under Mixed Expectations
Introduction: In August 2025, the HWP import offer ends its downward trend since April and rises by $20/mt. Currently, there is an apparent wait-and-see sentiment in the market, and further observation is needed for implementation. Although domestic and international market pulp producers have become more reluctant to sell at lows under to cost pressure, and supply tightening of imported market pulp lends some support to import offers, factors such as the shift in market sentiment, ample domestic HWP supply, cyclical headwinds, and insufficient profit improvement in the paper industry may collectively constrain the price hikes. It is expected that the HWP market price may remain range-bound in August.
HWP import offer sees $20/mt hike in August
In August 2025, the HWP import offer has been raised, putting an end to the downtrend since April. The market is currently characterized by strong wait-and-see sentiment, and implementation requires further observation. Major suppliers such as APP, Suzano and CMPC raised offers for August HWP volumes by 20/mt in late July and early August. Based on prior prices, the current range of HWP import offers is around 510-520/mt. Data from the past five years show that an initial increase of $20/mt in HWP import market prices during the second half of the year is relatively common. The August increase aligns with the amplitude of a typical first-month hike.
Although this increase matches the typical initial increase amplitude of the past five years, the import offer is still below the five-year historical average. Looking at HWP import market prices in 2024-2025, the fluctuation range from January to August 2025 was 120/mt, lower than the RMB 160/mt fluctuation in the same period of 2024. At present, the August contract price for August shipments is still in the negotiation stage, and transaction details are not yet clear. Market reflections indicate relatively low buying enthusiasm. In the meantime, the narrowing fluctuation range in market pulp offers also indicates cautious attitudes among sellers.
Offer for Chinese-made HWP has been raised for August, lending support to imported market pulp prices
On August 8, Asia Symbol announced an RMB 150/mt increase in order-taking price for HWP due to constant rises in costs of wood chips and chemicals, and the volume is only available for clients with long-term contracts. The price hike from domestic HWP producers helps boost market confidence and plays a positive role in supporting the upward movement of imported market pulp prices.
Divergence in pulp and paper price trends may affect buyers purchasing enthusiasm
Since August, prices in the downstream paper industry have generally shown a downward trend. The gross margin in virgin-based paper production has fluctuated at low levels, posing resistance to the rebound in HWP import market prices. As of August 12, the imported uncoated woodfree paper, coated paper and ivory board market prices still dropped by 0.25%, 1.13% and 1.00% respectively from late July, while the tissue price managed to remain firm. Given the slight increases in raw material pulp prices recently, the gross profit rates in paper production may continue to drop, and paper mills may be resistant to higher market pulp import prices.
Imported HWP price may remain range-bound in August under mixed factors
Sentiment: Domestic sentiment on the “anti-involution” initiative has cooled down significantly entering August, and players' expectations turn less bullish. The pulp futures market trend and the product’s financial attributes may affect the spot market trends of imported SWP, which may closely affect the imported HWP price with a narrowing price spread between the two.
Policy: Changes in international tariff policies may affect global supply flows and price trends. Wood pulp was exempted from the US tariffs imposed on Brazilian products, so aside from a temporary influence in July, the global pulp trade flow may normalize from August onward. Also, the pulp demand recovery in Europe is limited based on the consumption and inventory data from Europulp and UTIPULP. Thus, the market pulp shipments from Brazil to China, which generally account for 50% of China’s imports, may remain stable in September.
Supply: New Chinese capacity expansions, coupled with anticipated mill restarts, may generally have a bearish influence on pulp prices. However, recently announced production cuts and product swings at major overseas suppliers have boosted market confidence, providing support for upward movement in market prices. Domestically, following the HWP capacity expansion at Fujian Liansheng, Nine Dragons, and Xianhe New Materials in 2024, the 650kt/a HWP project at Hubei Nine Dragons has commenced trial production in June 2025. In addition, Shandong Chenming Paper held a meeting on August 6, requiring all departments to ensure the smooth operation restart at its Shougguang mill by August 30. Internationally, Bracell announced a plan on August 1 to convert one HWP line to dissolving pulp production for 70 days from September to November, resulting in an estimated 300kt loss in HWP output. On August 6, Suzano declared a 3.50% reduction in market pulp production over the next 12 months.
Competitive landscape: The growing substitution of Chinese-made market pulp will continue to affect the competitive landscape in the pulp market. Currently, integrated players in China face dual pressure from industry downturns and external sales challenges, alongside a lack of effective incremental demand. To stabilize market share or improve profits, some have offered hidden discounts in market pulp offers in previous stages, squeezing the price and profit space of imported market pulp. Recently, leading domestic players such as Asia Symbol have announced price hikes to improve profitability, which may lend support to imported market pulp prices. However, the actual implementation will be determined by downstream players’ acceptance and actual end demand recovery.
Cyclical pattern: Against a cyclical bearish phase, the severe overcapacity in the downstream paper sector has led to intensified competition, harming the profitability in paper production. Paper mills are generally less motivated to purchase high-priced pulp without effective recovery in paper price and production profits.
In summary, despite the support from overseas supply reductions, the sentiment among buyers in China is still relatively bearish. In addition to the stable supply of Chinese-made market pulp and ineffective paper profit recovery during the cyclical bearish phase, the pulp price hike may be restricted. It is estimated that the pulp market will remain range-bound in general during August, and it is suggested to pay attention to the launch of new HWP capacity in China, changes in Chinese-made market pulp supply, downstream demand recovery and potential changes in industrial policies.
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