【Wdoodoo Weekly Paper Industry Report】Frequent shutdowns and production cuts in pulp mills, leading to a new high of rebound in pulp production

This week, pulp prices initially declined before rebounding. The average price of coniferous pulp stood at around 4,987 yuan/ton, up 140 yuan/ton month-on-month, while broadleaf pulp averaged 4,461 yuan/ton, rising 147 yuan/ton month-on-month. Multiple coniferous pulp mills announced further production cuts, and as the peak season approaches, broadleaf demand has begun to pick up, leading to a long-awaited surge in pulp prices.

1. Macro-level bias toward support.

After the grace period for U.S.-Iran negotiations expired, the U.S. announced a new round of economic sanctions against Iran, leading to a significant surge in energy and industrial commodities amid geopolitical premiums. U.S. Treasury Secretary Yellen unexpectedly announced a long-term debt repurchase, which greatly impacted the U.S. debt-dollar credit narrative. The marginal improvement in liquidity benefited commodities. Continued attention should be paid to how changes in long-term bond yields influence U.S. policy choices.

2. Frequent production cuts in coniferous trees, while broadleaf trees show signs of price recovery

The main business of global coniferous pulp mills has generally entered a state of losses, with some coniferous brands facing cash flow constraints, leading to widespread production cuts or shutdown plans among pulp mills.

On August 18, an explosion occurred at the Kaukola Pulp Mill of Stora Enso in Finland, leading to a temporary shutdown. On August 20, Domtar announced an indefinite production halt at its Howe Sound coniferous pulp mill in British Columbia, resulting in a 380,000-ton annual reduction in NBSK supply, with its annual shipments to China decreasing by 50,000 to 100,000 tons.

In addition to the indefinite production suspensions of Lion and Beimu, the needleleaf production capacity has been reduced by approximately 1.5 million tons since 2026. Market expectations for shrinking future supply have led to a significant rebound in domestic pulp prices. Pulp mills are entering a high-frequency period of production halts and reductions, with Kunhe, a chemical-thermal pulp brand, also announcing a production suspension over the weekend.

In terms of hardwood pulp, the market continues to face pressure from the anticipated increase in production capacity at overseas pulp mills and the low-cost impact of domestic integrated forest-pulp-paper operations. However, as the traditional peak season approaches, current hardwood pulp inventories at ports remain at relatively low levels compared to recent years. Rumors suggest that due to rising production and transportation costs, some brands have raised prices by $10 per ton this round. Hardwood pulp is experiencing the anticipated structural rebound, but liquidity is expected to remain tight in the near term with limited improvement.

3. During the off-peak to peak season transition, actual orders are relatively weak

For packaging paper, there is forward stockpiling for Mid-Autumn and National Day holidays, but downstream demand remains mostly on-demand, making it difficult to effectively alleviate supply pressure. Distributors are reducing inventory through volume sales. In the cultural paper sector, autumn publishing orders are nearing completion, with social orders remaining sluggish. Downstream printing factories continue to operate on a just-in-time basis, showing little willingness to stockpile. In the tissue paper sector, production has increased, but inventory levels remain relatively ample.

The spot prices of major paper grades remained largely stable, with the impact of price hikes falling short of expectations. The processing margins of pulp and paper manufacturers were further squeezed, and some paper grades continued to operate at a loss. Mills predominantly adopted production control and sales-driven production models to adjust output.

Although there was a slight reduction in inventory at paper mills and distribution channels, the consumption of finished products downstream remained sluggish. Paper prices lacked sustained upward demand support, leading to rigid procurement of raw materials while exercising caution against chasing high prices.

Overall, short-term pulp prices fluctuated with a bias toward strength due to supply disruptions and peak season expectations, but high needlestock inventories and weak demand realities continued to suppress upward momentum. After the pulse-like rally, needlestock pulp still faces downward risks, with a core fluctuation range of 4600-4900. Broadleaf pulp remains structurally scarce, and the market trend may persist for a slightly longer period. Monitor inventory reduction during peak season, as the probability of exceeding demand expectations is low.

Risk warning: overseas pulp mill maintenance status, peak season demand, and pulp and paper inventory reduction.