Wood Chip Price Stabilizes as Weather Distortions Fade

SCI99

2025-12-04

Intro: In November, the weather has improved significantly overall compared to October, facilitating a restorative increase in wood chip supply. Although pulp mills still held purchase prices high during the month, they were not willing to further raise prices. In December, as the weather turns colder, there may be limited space for significant wood chip supply increases in northern China. Coupled with expectations for higher wood chip import prices, the domestic wood chip market may see limited downside space, with only marginal downward adjustments.

Domestic Wood Chip Prices Showing Divergence

Since early November, as the weather cleared up, the wood chip supply has been restored gradually in northern China. As of late November, the wood chip procurement volume in Shandong and Henan increased by 8.21% and 33.92% compared to that in late October. Some pulp mills maintained high purchase prices, reflecting wood chip deliveries below optimal levels. However, others lowered purchase prices slightly as they faced resistance when implementing price hikes for downstream products, while the wood chip deliveries have improved. As of November 27, the average poplar chip market price in Shandong was RMB 1,370/mt, down 0.36% from late October, and that in Henan was RMB 1,280/mt, up 1.59% from late October. The average eucalyptus chip market price in Guangxi was RMB 1,225/mt, maintaining a flattish trend.

Lower Pulp Operating Rates Weaken Support for Chip Prices

In November, the operating rates of the CMP and HWP industries deviated slightly. As of November 27, the CMP operating rate rose by 2pp from late October, while that of HWP dropped by 5pp. The operating rate decline was mainly due to the maintenance downtimes in East China and South China, which restricted the high wood chip prices.

Paper market may vary in December, with limited guidance for wood chip

In December, the demand peak season in the downstream paper industries will start to fade. Although some paper mills have released price increase notices in late November, planning to raise order-taking prices by RMB 200/mt, participants hold different expectations. Ivory board mills are more determined to raise prices, and agents also intend to follow the price hikes, so the price trend may generally be bullish in December> However, due to limited publishing tender deals and low prices in some regions, the price hikes for cultural printing paper may still face obstacles. Therefore, under different expectations among downstream players, the wood chip market may receive limited support in the future.

Wood chip import price to remain firm

On the other hand, the wood chip import price is expected to remain firm. It is heard that the FOB price from some Vietnamese wood chip traders has risen to around $160/bdmt, due to local supply-side disruptions by frequent typhoons and heavy rainfalls during H2 of the year, which affected wood chip production. Most large-sized pulp producers in China import wood chips on a routine basis, and the cost of wood chip shipment arrivals is expected to rise continuously without considering changes in logistics costs.

In summary, the performance of the downstream paper industry may provide limited guidance to the wood chip market due to bearish expectations in some sectors, which may restrict wood chip procurement from integrated players. However, the anticipated firm import costs may counterbalance the downside risk for wood chips. It is estimated that the poplar chip market price in Shandong will be around RMB 1,365/bdmt in December.

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