Paper Industry Updates - Q4 2019

Oct to Dec 2019

Pulp capacity & price changes

    • Producers’ inventory in August declined by 2 day, to 50 days of supply – hardwood inventory unchanged from July (flat at 62) and softwood inventory declined by 3 days (to 37). [PPPC, Sep Report]
  • Chinese softwood prices have been relatively stable for the last three months, suggesting that the cyclical floor has been established. Softwood demand has also been assisted by the narrowing differentials with hardwood grades this year. Based on PPPC shipments data, softwood shipments to China is up 42% year-on-year. [RISI
  • European (hardwood + softwood) pulp port inventory edged higher by 5% to 1.98 million tonnes in August.  [RISI, Sep 2019]
  • CMPC confirmed that it has shifted its market related downtime at its Santa Fe’s mill originally planned for 2020 to the fourth quarter of 2019. It also announced that it was increasing the downtime at its Guaiba mill in November 2019 [RISI, Sep 2019]
  • Observations of stronger seasonal demand in Q4 2019 is helping to stabilise the global pulp market. [APRIL Internal, Oct 2019]
  • Gap between softwood and hardwood has risen to more than $130-140/t; historically, such price gap rarely goes on for long period due to “swing” capability of pulp producer(s). Hardwood price likely on rebound to close this gap. [APRIL Internal, Oct 2019]
  • Suzano announced that they have sold out its port inventories in two of China major ports and confident to further reduce its inventory level by end of the year. It is envisioned that should the shipping tonnage from Suzano (as well as the rest of Brazilian producers) reduce in the coming months. [RISI + APRIL Internal, Nov 2019]
  • London Pulp Week: There was a tone of cautious optimism during the recent London Pulp Week; while many believed that the market may be at or close to a bottom, many also voiced concerns over downside risks to any possible rebound. [APRIL Internal, Nov 2019]
  • Suzano’s sellout of its entire Q4 BHK volume at $450-460/tonne has somewhat set the tone for the Chinese market till year end ; Chinese mills have accelerated the pickup of the pulp stocks stored in warehouses at the ports. Nov BHK port inventory totalled 1.56 million MT, a reduction from the 1.8 million MT observed in Oct. [RISI + APRIL Internal, Nov 2019]
  • Global hardwood pulp inventory has reduced and shipment has increased in Nov 19. [RISI, Dec 2019]
  • Suzano has sold out most of its China inventory – Chinese buyers of Suzano Q4 volume will arrive in China during February or March 2020. [RISI, Dec 2019]
  • Asia Symbol raised prices for the BHK supplied from the Rizhao mill by RMB 100/tonne ($14/tonne) in the Chinese market. [RISI, Dec 2019]

Paper capacity & price changes

  • North America's largest UFS producer Domtar to announce the permanent closure of about 204,000 tons/yr of capacity - immediately shut one machine and another in Nov 2019. (RISI, Oct 2019)
  • China UWF  paper producers have partly push through an RMB 100/tonne ($14/tonne) hike due to strong demand from seasonal orders for school material and special orders related to the 70th anniversary of the founding of the People’s Republic of China. Most domestic producer have also feedback that their paper machine are running at full capacity. [RISI, Sep 2019.
  • China paper producers achieved RMB 100/tonne hike for uncoated grades in October, with robust demand from the publication sector due to the 70th anniversary of the founding of the People’s Republic of China, together with seasonal orders for school materials. As demand and pricing for fine paper are expected to remain strong for the rest of the year, distributors are trying to seize the opportunity to expand their margins. [RISI, Oct 2019]
  • European regional market players expect UWF prices to stabilize in Q4 of the year.
  • Current paper price (seem to) hit its bottom-up level after series of decreases throughout Q2 and Q3; UPM Nordland conversion (UWF to glassine paper) also aid to tighten supply. [RISI + APRIL Internal, Oct 2019]
  • West Coast Paper Mills is now majority owner of International Paper APPM (IP APPM). International Paper (IP) to hold a minority stake of 20%. [RISI, Oct 2019]
  • Most major fine paper producers in China announced an RMB 100/tonne hike for both uncoated and coated grades for November orders. This round of increases has only been partly implemented: In East China, CWF have grown about RMB 80/tonne this month, UWF made of 100% chemical pulp is up RMB 70/tonne; Contacts from both mills and distributors told PPI Asia that fine paper prices are likely to level out after rising for three consecutive months. [RISI, Nov 2019]
  • Flambeau River Papers (FRP) was acquired by property development company Niagara Worldwide for $2.2 million at an auction – FRP total capacity was at 61,500 tonnes/yr
  • Brazil’s UWF prices unchanged due to seasonal peak; Higher seasonal demand allowed domestic.Demand for UWF paper in Brazil was temporarily ignited as the government advanced with its program for textbooks,  P&W  paper prices in Brazil to hold up in November despite slow economic growth and still high levels of uncertainty: Domestic UWF price are unchanged at Real 3,200-3,700/tonne; Imported UWF price in sheets is traded at $780-820/tonne. [RISI, Nov 2019]
  • Various sources reported that paper price has stabilised in Q4 2019 in North America, Europe, Korea and Japan. [RISI, Dec 2019]
  • Suzano will increase its uncoated papers price for its Brazilian customers by +6.5% starting from Jan 2020. [RISI, Dec 2019]