Demand for pulp has grown more than expected this year amidst better order books within the Chinese paper industry. This growth coincided with an unusually large number of unscheduled stoppages at pulp mills. The combination of these two factors led to a tightening of the market and significant price hikes. Supply rather than demand will dominate developments on the pulp market in 2018, though, a team of analysts with Hawkins Wright believes. It was unlikely that this year’s massive unscheduled production stoppages will be replicated again. Instead, the consulting firm is forecasting that new pulp mills that entered the market, especially in 2017, would lead to surplus capacity and possibly exert pressure on prices.

Anybody wanting to understand the global pulp market must be familiar with what happens in China. This simple comment is no secret, but has proven to be truer than ever in 2017, something that was also addressed at this year’s BWPA and Hawkins Wright Symposium, which was held on 9 November during Pulp Week in London. After all, macroeconomic factors, especially the weaker US dollar, have sent prices soaring not only for pulp but for all commodities since the start of the year. Yet, it was microeconomic elements, above all supply and precisely strong demand from China, that fuelled the massive mark-ups for both hardwood and softwood pulp, Oliver Lansdell from the consulting firm Hawkins Wright said in his presentation.

On the one hand, pulp mills held an extremely large number of unscheduled stoppages compared with years past. On the other hand, demand proved to be livelier than many industry observers had forecast. Hawkins Wright estimates that bleached chemical pulp shipments will rise by 1.6 million t in 2017 as a whole. This would be 2.9% more than in 2016. China alone was responsible for two-thirds of the overall increase in 2017, according to Mr Lansdell.

Source: euwid-paper.com