Suzano intends to keep pulp inventory levels low
“Suzano has learned from past mistakes, such as the one in 2019, when inventories were high,” said Walter Schalka, president of the company
Recently, new pulp projects have added new capacities that are gradually coming to market. According to Leonardo Grimaldi, commercial director of pulp and logistics at Suzano, the entry of more raw material to the market should be greater in the second half of this year. The combination of the entry of these new volumes with a weaker demand in Europe – together with the redirection of pulp that would be placed in this market to China – has pressured prices in the Chinese market.
So far, Suzano has pulp stocks at levels below ideal, with no intention of restructuring, despite the downward curve in prices. “Suzano has learned from past mistakes, such as 2019, when inventories were high. We will keep them at low levels”, said Walter Schalka, president of the company.
According to Grimaldi, in the first quarter of 2023, demand increased in China, even with greater concentration only in March. In Europe, in turn, demand was lower than expected, which caused the company to redirect volumes to the Chinese market – with a consequent sharper price correction. “We continue to see some optimism among customers in China and low inventories, which supports demand in the near term,” says the executive.
At the beginning of the second quarter, in April, order entry remained in line with the month of March and with historical volumes. However, the expectation is for continuity of the destocking movement in paper mills in Europe. “We expect the continuity of this direction of volumes from Europe to China and additional volumes of stronger pulp in the second half”, completed the director.
However, unscheduled shutdowns at factories should continue to pressure supply. Currently, fiber manufacturing in Asia must be reduced due to prices below marginal cost, which contributes to supply pressure. In this sense, according to Grimaldi, some integrated paper mills can temporarily stop their fiber lines and buy the raw material on the market – and Suzano itself has already sold pulp to integrated producers.
There is no precise data on the potential demand resulting from this movement, but, according to the executive, considering the integrated production of 8 million to 9 million tons in China and a 10% reduction, there would be additional demand of 800 thousand to 900 thousand tons of pulp market.
