Pulp Spot Market Balance to See Constant Adjustments in Next 3 Years
In 2020, the imported wood pulp spot market in China saw unexpected volatilities at the end of the year affected by multiple factors including the COVID-19 situation, rising pulp futures, turnarounds at major pulp producers, changes in the RMB exchange rate as well as rising industry concentration ratios in downstream paper industries.
The pulp and paper industry will still be in a recessive cycle from 2021 to 2023. After 2021, planned paper pulp capacity global wide will be over 40 million mt/a, and the loose supply will weigh on pulp price trends. However, as the industry enters a new investment cycle, the integration of pulp and paper capacity will accelerate, and the rising industry concentration ratio will stabilize and improve players’ profit.
Due to the expected continuous release of new pulping units like those at Bracell and Arauco, the pulp price may trend under pressure. The new pulp capacity in 2022 is mainly located in China. In addition to the capacity released overseas in 2021, the pulp supply is expected to increase greatly. In 2023 and after, there will be 6,970kt/a new capacity being added in Brazil, and the pulp price is expected to continuously trend under pressure. Therefore, the supply-demand balance in China’s pulp market will be subject to constant adjustments.
