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Pulp prices should be corrected in the second half

Weak data from the Chinese economy between April and June has contributed to this expectation

Weak data from the Chinese economy between April and June has contributed to fuel expectations of a correction in pulp prices in the second half of the year. Thus, a reduction of more than US$ 100 per ton is expected in the quotations practiced in the largest world market for the fiber, with reflections in Europe and North America, even if delayed.

Last week, the net price of hardwood pulp in the Asian market fell by US$ 2.20, to US$ 860.80 per ton, according to Fastmarkets Foex. Still, there is a rise of US$ 25.60 in a month – which confirms the full implementation of the most recent adjustment announced by the manufacturers.

In the case of softwood, there was an increase of US$ 1 in the week, to US$ 987.69 per ton, stable in one month. As a result, the spread (the price difference between hardwood and softwood pulp), of US$ 127 per ton in the Chinese market, practically returned to normal levels.

The resale price of eucalyptus fiber in China also confirms this trend, since last week, according to BTG Pactual, it corresponded to US$ 846.11 per ton, therefore below the net import price. In recent months, the sharp reduction in raw material inventories culminated in a sharp rise in resale values, which pushed up prices in general.

In a report on pulp prices, Itaú BBA stated that it expects a correction in hardwood prices in the coming months, given the weaker demand – even with low inventory levels. Until the end of the year, however, the team of analysts believes that prices should remain at healthy levels, between US$ 700 and US$ 750 per ton.

Considering widespread inflation, which affects all sectors of the world, the main brake on price correction must come from rising costs. This structurally higher cost inflation may provide some support for prices – consultancy Hawkins Wright estimates marginal cash cost of production (below which there would already be producers operating in the red) of US$600 to US$650 per ton of hardwood at this point.

Valor Econômico
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