Last week, pulp prices in China fell, confirming the most pessimistic forecasts by experts. The decline was due to weaker-than-expected seasonal demand and unscheduled stoppages at paper and board mills in the Asian country.
There was an expectation of a slight recovery in input prices before the end of the year, precisely because of stronger demand. However, in the very short term, the energy crisis in China and its impact on the local pulp and paper industry brought uncertainty.
According to analyst Caio Ribeiro, from the Credit Suisse bank, raw material prices followed the same downward trend seen since the end of the previous quarter. “The profitability problems faced by the paper mills in the period from May to July were followed by a period that usually brings greater seasonality in the region, but which disappointed this year, with logistical disruption, energy rationing and covid-19 outbreaks, among other factors that inhibited the recovery”, he analyzed.
According to UBS, in August, Chinese pulp imports dropped 12% year-on-year, highlighting the 16% drop in hardwood. Analysts at the bank believe the trend is for shipments to moderate in the coming months, as hardwood producers are directing higher volumes to the European market, where prices are higher.
“The lower inflow of imports is unlikely to be enough to improve market conditions, with prices under pressure due to unscheduled stoppages at the paper mills and disappointing seasonal demand so far,” they wrote in a report.