【Wdoodoo Weekly Pulp Report】Persistent oversupply in softwood pulp; pulp & paper sideways at bottom.

Last week, pulp prices trended weaker amid range-bound fluctuations, and the spread between softwood and hardwood pulp narrowed to historic lows. The average spot price of softwood pulp stood at around 5,071 yuan/ton, down 75 yuan/ton from the previous period. Hardwood pulp averaged 4,578 yuan/ton, up 4 yuan/ton week-on-week. Traders were active in shipments, yet end-user order follow-through was insufficient, paper mills showed limited willingness to purchase pulp, and market trading sentiment remained thin.

1. First Key Juncture in the Middle East Situation

2. Softwood Pulp Mills Face Major Inventory Destocking Challenges

Port-side softwood pulp liquidity is ample, with traders actively moving goods; focus remains on the digestion of low-priced cargoes. A rebound in softwood pulp may require more pronounced production cuts and destocking by pulp mills.

The uptrend in offshore hardwood pulp prices has been curbed. In March, offshore prices for eucalyptus hardwood pulp such as Star were raised by $20/ton to $620/ton, translating to an landed import cost of around 4,900 yuan/ton, with an import loss of nearly 350 yuan/ton.

The current softwood-hardwood spread has narrowed to around 500 yuan/ton, putting heavy pressure on traders to take delivery, while downstream paper mills maintain a cautious stance.

3. Weakening Finished Paper Prices Dampen Pulp Purchasing Sentiment

4. Elevated Port Inventory Pressure

Overall ViewThe market has remained sluggish recently, dominated by pulp and paper oversupply, with the softwood-hardwood spread narrowing to historic lows. Paper mills have seen limited improvement in profitability, conducting only small-scale bargain-hunting purchases on rigid demand.However, current futures prices have fallen below the production costs of softwood pulp in Northern Europe and North America, forcing pulp mills to consider output reductions. Coupled with the Middle East conflict, pulp production and transportation costs have risen.Softwood pulp is not highly overvalued, and earlier attempts to break lower on heavy volume failed, making further short-selling less attractive.Pulp prices are expected to gradually consolidate a bottom, with short-term range-bound trading between 5,000 and 5,300 yuan/ton. Investors may wait patiently for shifts in supply-demand expectations or engage in mild range trading.