【Wdoodoo Weekly Paper Industry Report】Spot basis strengthens, pulp oversold rebounds

Last week, the pulp first suppressed and then rose. The average spot price of needle pulp is around 4882 yuan/ton, an increase of 15 yuan/ton compared to the previous period; The average spot price of broad-leaved pulp is 4586/ton, a decrease of 1 yuan/ton compared to the previous period. Traders are reluctant to sell at high prices, and the spot basis has generally turned positive, causing a slight increase in broadleaf prices. However, the production and sales of finished paper are weak, and inventory pressure is high. Paper mills are cautious in replenishing raw materials.

1、 Macro recession atmosphere deepens, AI's fulfillment falls short of expectations

The intensification of geopolitical conflicts in the Middle East has led to sustained high costs of inflation expectations, tightening US dollar liquidity and suppressing commodity demand. AI returns fell short of expectations, raising doubts about capital expenditures and increasing expectations of a macro recession.

2. The expected increase in production capacity and the impact of old warehouse receipts still need to be resolved.

Belarus plans to build an 800000 ton pulp mill, APP plans to add 2 million tons of pulp production capacity in Guangxi and Hainan, and Canada's Needle Leaf Pulp Good Voice plans to resume production in November. The expected increase in long-term production capacity is suppressing the trend of the market.

However, the overall production capacity clearance trend of coniferous trees remains unchanged. With the recent drop in the market to needle cash costs, traders are reluctant to sell at low prices. Paper mills are active at low prices, and the spot basis has generally turned positive. Pay attention to the digestion of old warehouse receipts and port needles.

The inventory of broad-leaved ports is still low, and traders are unwilling to sell at low prices, resulting in a relatively stable overall trend. However, the current historical low level of price difference between needle and broad sectors is necessary for the market to stabilize in order to restart its upward trend.

Weak production and sales of finished paper, with accumulated inventory

The performance of downstream orders is average, and there is still pressure on paper mills to ship, resulting in a continued decline in finished paper prices. The sales pressure of white cards and cultural paper is relatively high, while that of household paper is relatively stable. Downstream raw paper enterprises are under pressure in processing, with paper mills mainly reducing prices and increasing volume, resulting in low gross profit. It is expected that the operating rate will be difficult to increase in the near future, and the demand side's support for pulp is average. Pay attention to the inventory turnover of finished paper products.

Overall, the production and sales of finished paper products are weak, and there is significant inventory pressure. The willingness of the paper mill to replenish raw materials is poor, and the clearance of pulp port inventory is slow. However, with the marginal contraction of needle pulp supply, traders are reluctant to sell at low prices, and the needle base has generally turned positive, making the advantage of undervalued market more apparent. The driving force of pulp long and short is limited, and it is expected that the main force will fluctuate between 4500 and 4800, with a focus on wait-and-see or interval trading. Follow up on the inventory of finished paper and port pulp.