【Wdoodoo Weekly Cotton Report】Raw paper processing is under pressure, and the pulp trend is loose

Pulp trading differentiation before and after holidays. The average price of needle pulp is around 4915 yuan/ton, a decrease of 50 yuan/ton compared to the previous period; The average price of broad-leaved pulp is 4615 yuan/ton, an increase of 35 yuan/ton compared to the previous period. The price increase of finished paper is difficult to implement, and paper mills continue to reduce inventory and purchase raw materials at low prices.

1. On a macro level, there is a slight bullish trend.

In September, the number of non farm workers added in the United States was only 29000, and the data for July and August was significantly revised down. Federal Reserve officials turned dovish overall and may suspend interest rate hikes in October. The United States has entered the sprint stage of the midterm elections, and the Trump administration has strong demands for improving the liquidity environment. The US military is escorting in the Strait of Hormuz and, in conjunction with the G7, is releasing 100 million barrels of strategic reserve crude oil to suppress oil prices over the next four months.

2. The external quotation has rebounded slightly, and the inventory pressure of coniferous and broad-leaved trees remains differentiated.

At the end of September, the market rebounded, giving importers a risk-free hedging opportunity, and then the external market report was raised as scheduled. Arauco announces October quote: Needle Pulp Silver Star up $10 to $680; Broad leaved pulp stars rise by $20 to $610; Natural Gold Star Flat Plate $660.

However, there is ample liquidity of coniferous trees in the port, and the inventory is still to be digested, resulting in fewer high priced transactions. Paper mills often purchase at low prices just in need, and there has been no large-scale replenishment of inventory. Recently, Canada's Voice has cancelled permanent production shutdowns and resumed production on November 1st, further increasing supply pressure. The exchange will cancel around 120000 tons of warehouse receipts at the end of the year, which will temporarily suppress the market.

The broad-leaved trees are relatively strong, and based on port inventory and shipping data, the short-term pressure on broad-leaved trees is still acceptable. Goldfish, celebrities, and others saw a general increase of $20/ton in prices in October, maintaining expectations of price increases. However, with the increase in shipments from South America, it is expected that liquidity will gradually improve in the future.

However, the current needle wide spot price difference is low, and the delivery of needle pulp products has also seen a certain upward trend compared to the market. Broad leaved trees continue to steadily rise, providing some support for coniferous trees.

3. The quotation for finished paper has weakened, and demand support is limited

The production and sales of various mainstream paper types are low, and the price of finished paper continues to decline. The pressure of white cards and double glue is relatively high, and only the peak season factor of household paper has slightly pushed up. Downstream raw paper enterprises are generally experiencing losses in processing, with paper mills mainly reducing prices and increasing production volume. In the short term, gross profit is sluggish, and it is difficult to increase operating rates. Therefore, they are cautious in pursuing high demand raw material procurement.

Overall, needle production capacity is still in the process of clearing, with strong support from cash flow costs near the first low of 4500 ($580). However, the high inventory in the port suppresses the space above, and there is significant hedging pressure near the import cost. The main core fluctuation range is still between 4600-4900, and the interval approach should be taken. However, based on the improvement of the supply and demand margin, the bearish trend of the long-term moving average system has turned volatile. After seasonal pressure in October and November, it is expected that there will be upward space in the medium and long term, and there will be more monthly orders on dips.