The Wood Pulp Market in China

China's Wood pulp market: Prices fluctuate amid high inventories and logistical challenges

    According to SunSirs monitoring data, the wood pulp market in China was characterized by short-term fluctuations last week. The price of softwood pulp remained in a stable range, while the price of hardwood showed a slight downward trend.

    As of March 6, the average price in Shandong Province was:

•     - 5,350 yuan/ton — softwood pulp;
•     - 4,600 yuan/ton — hardwood pulp.
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Key factors influencing the market

International logistics and supply

The closure of the Strait of Hormuz has led to a significant increase in freight rates and delays in shipments. This directly affects the cost of imported pulp, which is an important part of the raw material base for Chinese pulp and paper mills.

 Despite the shutdown of production at the Fenlinfenbao European plant, the market reaction was restrained.  

    The main reasons:

•     - diversification of import sources;
•     - availability of sufficient stocks from large processors;
•     - switching to alternative supply routes.
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Port stocks and domestic demand

    After the Spring Festival, there has been an accumulation of stocks in national ports, which have reached 2.408 million tons.

Key trends:

•     - factories have completed restocking of raw materials before the holidays;
•     - processors are taking a wait-and-see attitude, not seeking new large purchases;
•     - the increased cost of imported raw materials constrains demand;
•     - a slowdown in the pace of production in the packaging materials sector.

Stock market sentiment

    Pulp futures on the Shanghai Futures Exchange showed little volatility, closing at 5,322 yuan/ton. This reflects the general uncertainty of market participants and their cautious expectations regarding the further development of the situation.

Regional specifics

    The situation in the port of Qingdao, a key logistics hub for pulp imports, deserves special attention.:

•     - a significant part of the port reserves is concentrated here;
•     - the speed of cargo turnover in this port will become an important indicator of the market balance;
•     - local refiners form price expectations based on stock dynamics in Qingdao.
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SunSirs analysts' Forecast

    In the short term, the market will remain unstable. The key factors for monitoring will be:

•     - the turnover rate of port stocks (especially in Qingdao);
•     - the attitude of processors and their willingness to purchase;
•     - development of the situation with international logistics;
•     - price dynamics in alternative markets (South‑East Asia, Latin America).

    Prices are expected to continue to fluctuate under pressure.:

•     - high port stocks;
•     - expensive logistics;
•     - restrained domestic demand.

    The medium-term forecast assumes gradual stabilization, provided:

•     - normalization of logistics chains;
•     - increased domestic demand from the packaging industry;
•     - reducing inventory levels to comfortable levels.

Tags: #woodcellulose #China #cellulose prices #logistics #port stocks #Shanghai futures exchange #Qingdao #Shandong #Fenlinfenbao #SunSirs