- Paper pulp prices continue to gather momentum in China and Europe: Hardwood prices in China edged up 2% further, while softwood was stable. Meanwhile, hardwood jumped 4% in Europe, while softwood too increased by 2%. NOREXECO pulp futures keep edging up and for 24E imply a healthy improvement for hardwood (+9%) and softwood (+5%) pulp prices in Europe, while prices in China are expected to remain stable from current levels.
- Key take-aways from London Pulp Week and implications for global markets in 2024: While few participants doubted that upward momentum was building in the Western Hemisphere in the short term, questions arose as to the longevity of the rally in China, as seasonal demand strength will likely wane through the end of the year. Looking forward to 2024, global pulp markets appear to be entering the new year on a heathier footing as the excess inventory overhang has been cleared. Despite the successful management of supply in 2023 and the upside risks for tighter conditions in 2024, near-term demand is waning seasonally in China, and demand in Europe and North America remains lacklustre.
- Textile prices in China softened this past week, with cotton, polyester and VSF all down 1%: The VSF op. rate remains stable at 85% (85% last week) and VSF inventory days edged up slightly to 0 (from 9.5 last week), still well below the historical average of around 20 days. Meanwhile, the theoretical VSF margin for Chinese producers deteriorated to -$44/t (from -$28/t last week). The Lyocell market softened with the price down 2%, while the operating rate remains stable around 83%.
- DP prices continue to gain traction (up around 1%) and could reach $910/t: As of today, the imported hardwood DP is now trading at $885/t, and the DP/pulp spread is $297/t (from $300/t last week). According to CCF, more hardwood pulp mills from the Southern hemisphere made offers clear, generally adjusted up to $910/t. The domestic DP price too edged up 1% to ¥7,550/t ($1,033/t, a $148/t premium to imports). In the Chinese market, Sun Paper was steadily producing dissolving pulp, and Hunan Juntai had started maintenance, but may switch back to dissolving pulp production. In other news, LD Celulose (JV between Lenzing and Dexco), operated at 80% of its production capacity (500Kt/yr DWP) between July and September 2023, and continues to see margins improve. The company however continues to flag concerns around the cost and availability of wood, with the average now 2.2x higher than in 2021.
- CWF edges down 1%, while further UWF hikes announced: Lecta is in the final phase of the previously announced closure of the remaining CWF paper machine, PM 4, at its Condat mill in France. Going forward, the Condat mill will fully focus on the production of high-quality release liners and one-side coated specialty paper on PM 8, which was converted from CWF production in 2021. The idled PM 4 (200Kt/yr of CWF paper) will be kept on site for future conversion options. Following Navigator’s recent price increase announced, Burgo has followed with a 6-7% increase for UWF paper in all of its European and overseas markets citing rising costs (pulp and energy).
- After weeks of stable prices, containerboard softened this week: Kraftliner softened by 1% w-o-w to €692/t, while testliner dropped 2% to €505/t. Meanwhile, OCC continues to increase, up 2% w-o-w to €102/t. In Italy, Progest’s Mantova recycled containerboard mill (400Kt/yr) continues to see irregular production.
