【Wdoodoo Weekly Pulp Report】Softwood pulp faces heavy destocking pressure, with pulp prices fluctuating weakly.

Pulp futures saw increased positions and declined this week, with spot prices weakening in tandem. The average spot price of softwood pulp stood at around 4,945 yuan per ton, down 118 yuan per ton from the previous period and hitting a new low in recent years. Hardwood pulp remained relatively steady, with its average spot price at 4,536 yuan per ton, a drop of 10 yuan per ton month-on-month. Amid the off-season atmosphere, downstream buyers lack purchasing confidence. Paper mills only replenish inventories out of rigid demand, and high port inventories continue to weigh on pulp prices.

1. Commodity index turns range-bound

Tensions between relevant countries remain volatile, with negotiations and conflicts taking place simultaneously. Reports suggest the two sides are close to reaching a ceasefire memorandum, which triggered a pullback in the energy and chemical sector last week. Hawkish remarks from within the Federal Reserve have grown louder, and the European Central Bank is likely to kick off a new round of interest rate hikes. Against this backdrop, the commodity index has shifted from an upward trend to sideways movement.

2. Mounting supply pressure and weak overseas quotations

China’s total pulp imports in April reached 3.218 million tons, down 2.4% month-on-month but up 11.2% year-on-year. The cumulative imports from January to April totaled 12.556 million tons, a year-on-year increase of 0.2%. Specifically, imports of bleached softwood pulp amounted to 910,000 tons, rising 11.7% month-on-month and 20.1% year-on-year.

Softwood pulp supply remains abundant with sufficient stocks at domestic ports, and traders are active in destocking. Actual overseas transactions have softened, while downstream purchasers stay cautious. Hardwood pulp faces mild inventory pressure with prices lingering at low levels, so pulp mills and traders continue to hold firm on quotations.

Arauco of Chile set its May overseas quotation for softwood pulp at 680 US dollars per ton (unchanged). The quotation for unbleached pulp (Venus brand) was 630 US dollars per ton (up 10 US dollars per ton), while no supply is available for its hardwood pulp (Star brand).

3. Weak demand support; focus on the sustainability of packaging paper rebound

The downstream market has fully entered the off-season. Finished paper prices edged lower with limited margin improvement, and paper mills mainly place small orders for rigid inventory replenishment. Offset paper suffers poor profitability and coated paper keeps seeing sluggish orders, while some cultural paper producers have switched production lines. More household paper manufacturers have scheduled maintenance, leading to reduced supply. White cardboard struggles to raise prices and maintains high inventory levels. Overall demand provides little support to pulp prices. The sustainability of the rebound in packaging paper deserves close attention.

4. High inventories cap price gains

As of May 21, inventory at major monitored ports stood at 2.283 million tons, down 0.7% month-on-month but up 5.8% year-on-year. Inventories have posted a slight decline for two consecutive weeks yet remain at a historically high level for this time of year. The high proportion of softwood pulp in stock keeps suppressing pulp prices.