Attention Be Paid to Influence of Chenming’s Restarts
Introduction: In November 2024, Chenming halted production unexpectedly, and most of its pulp and paper production lines remained effectively shut down for the next 9 months. In August 2025, Chenming Group held consecutive work meetings on resuming production, explicitly requiring operations to restart by the end of August. This news is expected to boost consumption in the imported pulp spot market in September, potentially driving a narrow 1.47% MoM increase in the average price of imported SWP. However, overcapacity in the paper industry may continue to weigh on paper prices, thereby limiting the upward potential of pulp prices in September, and potentially leading to a downtrend in Q4.
Concentrated capacity expansion at major pulp producers offset the impact from shutdowns
Chenming held meetings on August 6 and August 13 to comprehensively deploy key tasks and ensure timely production resumption. According to SCI, Chenming's unexpected shutdown in November 2024 halted production of its major integrated pulp and paper lines across China, of which the capacity accounted for 13.21% of China’s total as of 2024.
However, Chenming’s unexpected shutdown had only a temporary influence on the imported wood pulp spot market, mainly because of the company's high level of integration, which had limited exposure to market pulp purchases. Also, the constant capacity expansion of other players in China and overseas countries offset Chenming’s supply contraction. In 2024, the capacity addition at players such as Nine Dragons, Xianhe New Materials, Wuzhou Specialty and Liansheng Pulp and Paper expanded China’s total capacity by 15%, offsetting the shutdown capacity of Chenming, which accounted for roughly 13% of the total.
Price uptrend may hardly be sustainable with persisting market oversupply
In 2025, new pulp capacity expansion continues in China with over 2,000kt/a launched at companies such as Yibin Paper, Taiding New Materials, the Dongying mill of Shandong Huatai, the Hubei mill of Nine Dragons, and the Zhangzhou mill of Liansheng Paper. Some players such as Taiding New Materials and Shandong Huatai have already achieved stable market sales, accelerating the process of domestic substitution.
At its August 13 meeting, Chenming has explicitly prioritized restarting production at its Shouguang mill, followed by gradual resumptions at its other mills in Jilin, Jiangxi, and Zhanjiang. In terms of capacity structure, the group mainly operates chemical pulp (including both soft and hardwood grades) and CMP lines. During the restart phase, the company is expected to prioritize purchasing imported SWP, while HWP consumption will be briefly supplemented by market purchases of imported and domestic volumes.
Chenming's production resumption will influence the imported pulp spot market from two aspects:
First, the market pulp demand may improve marginally. Chenming primarily produces mainstream paper varieties such as coated paper, uncoated woodfree paper, ivory board, and tissue. After operations resume in late August, its procurement demand for imported pulp will gradually increase, likely boosting consumption in the imported pulp spot market in September and providing some price support on the demand side.
Second, supply-side pressure may intensify. Currently, China’s paper industry faces severe overcapacity. Although September marks the traditional peak season for ivory board and tissue, coated paper and uncoated woodfree paper will enter an off-season. Seasonal demand may offer short-term support to the paper market, but overall, price competition due to more intensive overcapacity after Chenming’s restarts may drag pulp prices and profit margins.
It is worth noting that before the end of 2025, China still has around 2,000 kt/a of new pulp capacity scheduled for launch. With the restart of idled units and the launch of new capacity, the pulp market may face greater pressure of supply-demand imbalance. It is estimated that the pulp price may return to fundamental-driven fluctuations and see a downtrend in Q4.
In summary, after Chenming Group's production resumption, incremental pulp demand may provide some support starting in September, bolstered by the traditional peak season in the paper industry. This could help lift the monthly average price of imported SWP spot by 1.47% MoM. However, as supply-demand tensions in the paper market intensify at the same time, low paper prices will constrain pulp price gains. In Q4, amid continuous expansion of domestic pulp capacity, the supply-demand imbalance in the pulp market may hardly improve, keeping imported pulp prices under downward pressure.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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