Pulp industries can benefit from increased demand and low inventories

According to the risk rating agency Fitch Rating, pulp industries in Latin America, such as Brazil’s Suzano and Chile’s Arauco, will benefit from an increase in pulp prices, which have been falling in recent months.

According to Fitch estimates, an improvement in demand and a drop in pulp inventories will raise average prices of the commodity exported to China to around US$ 650 per ton later this year, a value above the minimum registered in May 2022, when it was traded for US$ 460 a ton.

Even so, the estimate is approximately 25% below the US$ 860 per ton registered between the months of July and October last year.

The stabilization of pulp prices should maintain the current outlook for the corporate debt profiles of companies in the sector in the region, after a complex period in 2022, Fitch said.

In the released report, the agency also pointed out that the recent drop registered in pulp prices this year will lead to a drop in the average revenue and cash flow of the pulp and paper industries in 2023 and 2024, even with the plans of some of them to improve your productivity.