In December, hardwood pulp prices started the correction expected for months before, although they should not register abrupt or accentuated falls in the first quarter of this year. Suzano, the largest producer of this type of pulp in the world, had already confirmed a price reduction in the last month.
Bearing in mind that the new capacities in operations reach the market with more significant volumes only in the second half, in addition to the possible resumption of economic growth in China, it is expected that the commodity will stabilize at current levels or slightly lower for some time.
In 2022, raw material prices experienced successive readjustments, followed by stability close to historical levels. In July, when values reached their peak, a tonne of short fiber reached US$ 910 in China, while in Europe the reference price reached around US$ 1,400 and, in North America, more than $1,600.
However, in December, according to Fastmarkets Foex, the net price of hardwood in China was US$ 856.08 a tonne, still not reflecting the cut of US$ 40 per tonne announced by Suzano. For nearly five months, hardwood prices in China have held at $860 per tonne.
With pulp availability reduced due to unexpected stoppages at producers around the globe, strikes and problems in the supply chain, global inventories have reached critical levels, and have not yet been fully normalized, particularly in China. In addition, the sector also faced global inflation and higher wood costs – or shortages, as seen in Europe, after embargoes on Russia for the invasion of Ukraine – corroborating the increase in prices due to high costs.
As for 2023, at least two important new capacities should come into operation in the market – UPM’s Paso de Los Toros unit, in Uruguay, and Projeto Mapa by Arauco, in Chile. With both mills, 3.6 million tonnes of hardwood pulp will be gradually added to the market, which is growing at the rate of 1.5 million tonnes per year. For this reason, investors and analysts start the 2023 and 2024 cycle with caution, awaiting the arrival of these volumes to the market.
In this sense, this year, there is room for the price drop to be advanced. With the reopening of China – after measures against Covid-19 outbreaks in the country – the demand for pulp and paper can be stimulated.
