【Wdoodoo Weekly Pulp Report】The paper sector’s low season approaches, with pulp consolidating at the bottom. 术语解析

Pulp traded in a low-range consolidation last week. The spot average price of softwood pulp stood at about 5,039 yuan per ton, up 8 yuan per ton from the previous period. The spot average price of hardwood pulp was 4,548 yuan per ton, down 4 yuan per ton. Industrial supply and demand have changed little recently. Terminal orders remained sluggish after the holiday. Paper mills still focus on destocking with cautious raw material purchasing sentiment, leading to quiet market trading activity.

1. Bullish macro support

The US-Iran situation remains volatile with negotiations and conflicts taking place simultaneously, keeping energy and logistics costs at a high level. Frequent high-level China-US diplomatic interactions have paved the way for a leaders’ summit. Overall, the macro environment provides bullish support for commodity markets.

2. Ample pulp liquidity with marginal import decline

After the digestion of low-priced softwood pulp supplies in the early stage, market transactions turned quiet again. Pulp mills and port inventories are under substantial pressure at present; traders remain cautious on procurement, and the next round of US dollar offers is expected to move lower. Nevertheless, shipping data points to a marginal decline in future pulp arrivals. Canada’s softwood pulp shipments in March reached 143,300 tons, down 25.03% month-on-month and 23.27% year-on-year.

Hardwood pulp remained weak, with resistance to high-price transactions, and market participants cut prices to boost sales. As the traditional pulp and paper off-season approaches, finished paper faces heavy delivery pressure. Paper mills cut production and destock, only making rigid raw material purchases on dips. The price of low-cost chemi-mechanical pulp also moved lower. Demand support for hardwood pulp has weakened, with attention on the key support level of 4,500 yuan/ton for eucalyptus pulp.

Still, hardwood pulp is already at a relatively low absolute price level with limited inventory pressure, so the impact of the off-season is expected to be moderate. The spread between softwood and hardwood pulp has narrowed to within 500 yuan, hitting a five-year low. Northern bleached softwood pulp prices have stabilized after being pressured by early liquidation. The compressed softwood-hardwood price spread is likely to underpin a gradual stabilization in softwood pulp.

3. Seasonal weakening in demand

The paper industry has entered the off-season, with operating rates across all paper grades continuing to decline. Terminal demand remains sluggish and paper mills face heavy inventory delivery pressure. To ease operational burdens, downstream paper mills mainly purchase raw materials on dips.

Cultural printing paper and white cardboard enterprises issued price hike letters to prop up market prices, yet actual implemented gains were limited. Without substantial bullish drivers on the demand side, the room for weekly processing profit recovery in the industry is constrained.

4. Persistently high port inventory pressure

As of Friday, inventory at major national ports stood at 2.37 million tons, up 20,000 tons week-on-month and remaining at a historically high seasonal level. Inventory destocking during the peak season was limited, while inventory re-accumulation has emerged in the off-season, capping pulp rebound momentum.

Overall Outlook,Trading activity is subdued amid the demand off-season, and high port inventories weigh on the market, bringing strong selling pressure on pulp rallies. Meanwhile, the market failed to break downwards with expanded volume twice recently, leaving limited cost-effectiveness for chasing short positions. The pulp index is expected to range trade mainly between 5,000–5,200 yuan/ton in the short term. Investors are advised to wait for clearer supply and demand signals or conduct light positional range trading.