【Wdoodoo Weekly Paper Industry Report】As the peak season arrives, observe the surge in demand and the rebound of pulp prices after a second round of bottoming out

This week, pulp oversold and rebounded. The average price of needle pulp is around 4848 yuan/ton, an increase of 36 yuan/ton compared to the previous period; The average price of broad-leaved pulp is 4314 yuan/ton, a decrease of 22 yuan/ton compared to the previous period. The traditional peak season market demand has not yet increased, and raw paper companies are mainly shipping. Some traders are reluctant to sell at high prices, but the follow-up of pulp orders is relatively slow.

1. Macro support tends to be bullish.

The marginal decline in US inflation coupled with weakened consumption has led to a decrease in expectations of a September interest rate hike, providing more support for commodities. But energy brings uncertainty. The temporary memorandum of understanding between the United States and Iran expires on August 17th, and there has been no substantial breakthrough in the current negotiations, resulting in fluctuating shipping risks in the Strait of Hormuz.

2. Silver Star's price increase has not been successful, while broad-leaved trees show signs of rising prices

Recent financial reports show that the main business of global coniferous pulp factories has generally entered a state of loss, and some coniferous brands have tight cash flow. Many pulp factories have plans to stop production cuts. Lion brand and Beimu will permanently shut down within the year. Recently, Finlin Group announced the upgrade and renovation of Finland's Kemi pulp mill (with an annual output of 1 million tons of coniferous wood pulp) in October, which is expected to shut down for 5-6 weeks. The market speculates that there may be more production cuts.

However, the short-term supply pressure of needle needles remains unchanged, and the impact of production cuts will be more far-reaching. Recently, the situation of receiving goods from the coniferous market has been average. Arauco announced that Silver Star will lower its price by $20/ton to $670/ton in August.

In terms of broad-leaved pulp, it continues to be impacted by the expected increase in production capacity from overseas pulp factories and the low-priced integration of domestic forestry pulp and paper. However, with the traditional peak season approaching, the current broad-leaved inventory in ports is in a relatively low area in recent years. Market rumors suggest that due to rising production and transportation costs, some brands may increase their prices by $10/ton this round, and there may be a structural rebound opportunity for broad-leaved products in the short term.

3. Finished paper shipments are the main focus, and peak season replenishment has not yet been initiated

The price of finished paper has stabilized, and the operating rate has rebounded slightly. The peak season stocking has not yet started, and the terminal orders are average. The paper mill prioritizes digesting the raw paper inventory and has a weak willingness to purchase raw materials. As the peak season approaches, paper mills are gradually raising prices, but the implementation situation still needs to be observed.

4. Pay attention to the progress of finished paper and pulp inventory.

Last week, the pulp port once again destocked 1.5% to 2.248 million tons. But the warehouse receipts have once again accumulated inventory, suppressing market confidence. However, the paper mill proactively goes to the warehouse before the peak season. If the inventory goes well in the third quarter, it will bring some space for the fourth quarter.

Overall, there have been frequent reports of overseas pulp mills stopping production cuts, and the expected peak season has supported pulp prices. Last week, pulp hit the bottom twice but failed, and the market rebounded from oversold. But the peak season demand has not started, and the paper mill has not yet concentrated on replenishing inventory. Port liquidity is abundant, warehouse receipts continue to accumulate, and import costs suppress the market to a high degree. In terms of short-term operations, the core range of 4600-4900 is fluctuating, and we are observing or trading within the range. Focus on downstream stocking recovery, inventory turnover, and pulp plant maintenance dynamics.