Seven Concerns of the Global Pulp Market in 2023
The improvement in pulp supply coincides with weak demand, and various risks such as inflation, production costs and the new crown epidemic will continue to challenge the pulp market in 2023.
A few days ago, Patrick Kavanagh, Senior Economist at Fastmarkets, shared the main highlights. Candle box
Increased pulp trading activity
Availability of pulp imports has increased significantly in recent months, allowing some buyers to build inventories for the first time since mid-2020.
Alleviate logistics troubles
The easing of maritime logistics was a key driver of import growth as global demand for goods cooled, with port congestion and tight ship and container supplies improving. Supply chains that have been tight over the past two years are now compressing, leading to increased pulp supplies. Freight rates, especially container rates, have dropped significantly over the past year. Candle jar
Pulp demand is weak
Pulp demand is weakening, with seasonal and cyclical factors weighing on global paper and board consumption. Paper bag
Capacity Expansion in 2023
In 2023, three large-scale commercial pulp capacity expansion projects will start successively, which will promote supply growth ahead of demand growth, and the market environment will be relaxed. That is, the Arauco MAPA project in Chile is scheduled to start construction in mid-December 2022; UPM’s BEK greenfield plant in Uruguay: it is expected to be put into operation by the end of the first quarter of 2023; Metsä Paperboard’s Kemi plant in Finland is planned to be put into production in the third quarter of 2023. jewelry box
China’s Epidemic Control Policy
With the continuous optimization of China’s epidemic prevention and control policies, it may enhance consumer confidence and increase domestic demand for paper and paperboard. At the same time, strong export opportunities should also support market pulp consumption. Watch box
Labor Disruption Risk
The risk of disruption to organized labor increases as inflation continues to weigh on real wages. In the case of the pulp market, this could result in reduced availability either directly due to pulp mill strikes or indirectly due to labor disruptions at ports and railways. Both could again hamper the flow of pulp to global markets. Wig box
Production cost inflation may continue to rise
Despite the record-high pricing environment in 2022, producers remain under margin pressure and therefore production cost inflation for pulp producers.
Post time: Mar-01-2023