【Wdoodoo Weekly Paper Industry Report】Pulp mills cut production to support pulp prices, while weak paper prices limit the upside

This week, pulp prices showed divergent trends. The average price of coniferous pulp was around 4,938 yuan/ton, down 50 yuan/ton from the previous period, while the average price of broadleaf pulp was 4,516 yuan/ton, up 55 yuan/ton. Pulp mills' production cuts and shutdowns supported the prices, but the price hikes for finished paper struggled to materialize. Paper mills replenished raw materials at low levels for essential needs, while being relatively cautious about chasing higher prices.

1. Macro-level support is relatively strong.
The energy-related geopolitical premium continues to persist. The U.S. July PCE price index annual rate remained flat at 3.7%, while Federal Reserve Chair Jerome Powell delivered a hawkish speech at the Jackson Hole meeting, disrupting the weak dollar momentum. However, long-term interest rates are expected to remain elevated, with limited policy room for the U.S. The probability of a rate hike in September is deemed low. Domestic policy expectations for stabilizing growth are heating up, and the anticipated U.S.-China leaders' meeting in September is expected to provide additional support for commodities.  
Supply pressure remains significant, but marginal benefits exist
In July, the total pulp imports amounted to approximately 2.73 million tons, marking a 6% month-on-month decrease and a 5% year-on-year decline. Among this, the import of coniferous pulp was 644,000 tons, showing a 16.1% month-on-month drop but remaining flat year-on-year. The import of broadleaf pulp was around 1.129 million tons, decreasing by 10.4% month-on-month and 16% year-on-year

Global softwood pulp mills are generally operating at a loss, with some brands facing cash flow constraints and many mills planning production cuts or shutdowns. Since 2026, softwood production reductions have approached approximately 1.5 million tons. Market expectations of declining future supply have pushed spot softwood pulp prices higher. However, difficulties in digesting inventory and warehouse receipts are limiting further upside potential.
In terms of hardwood pulp, current port hardwood inventories are at relatively low levels compared to recent years, with strong demand support from downstream industries during peak seasons. Due to rising production and transportation costs, hardwood foreign market prices remain stable, with South American goldfish pulp prices increasing by $20/ton this round. The structural rebound in hardwood prices continues, and liquidity is expected to remain tight in the near term without significant improvement.  

3. Weak performance on the demand side
Spot prices of major paper grades remained largely stable, with the impact of price hikes falling short of expectations. Processing margins for paper manufacturers were further squeezed, and some grades continued to operate at a loss. Although inventory levels at mills and channels showed slight reductions, downstream consumption of finished products remained sluggish. Mills primarily adjusted production through output control and sales-driven models, making it difficult to raise short-term operating rates. They maintained rigid procurement of raw materials while exercising caution against speculative purchases.

Overall, short-term pulp prices are influenced by supply disruptions and seasonal demand expectations, with clear support at the bottom. However, high inventory levels of coniferous pulp and weak demand realities continue to limit upside potential, while hedging pressure near import costs remains significant. The primary fluctuation range for the core market is 4600-4900. The structural shortage of hardwood pulp may lead to slightly longer market sustainability, with attention needed on the resistance near the 600 USD mark. Monitor seasonal inventory reduction and note that the likelihood of exceeding demand expectations is low.  

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