TC INVESTMENT

Characteristics and Trends of Hardwood Pulp Market

1 Characteristics of the current global hardwood pulp market

(1) The production capacity has increased, and the trend of new production capacity tilting to low-cost countries such as Brazil, Indonesia, China, including Uruguay and Chile is very obvious.

(2) The use of new technologies, the construction of large-scale pulp mills, and the large-scale planting of artificial fast-growing and high-yield forests have further reduced the manufacturing cost of hardwood pulp and strengthened its competitiveness.

(3) Most of the plans for new pulp mills come from established companies, which will make the supply resources more concentrated in the future. The result is that if the suppliers compete against each other, they may lose both; if they work together, they can Regulate the market, and undoubtedly the latter is more likely.

⑷ From the perspective of hardwood pulp tree species, the global pattern of eucalyptus as the mainstream will be more stable, while the hard and miscellaneous tree species from Indonesia will gradually decrease, acacia will gradually become the mainstream of the market, and poplar BCTMP will become more and more The quality of domestic pulp improves faster, which is close to or equivalent to imported products.

2 Characteristics of domestic hardwood pulp market in 2006

The characteristics of the domestic hardwood pulp market in 2006 can be summed up as follows: high opening and high walking, steady and steady, step by step, and tacit understanding.

Since January 2006, the quotations of Brazilian eucalyptus pulp at US$540/ton and Indonesian hard miscellaneous wood pulp at US$530/ton, the futures quotation of hardwood pulp has always shown an obvious "rising-flat-rising-flat-rising- Flat" steady curve, thus gradually stabilized at $630/ton, the highest level in the past five years. In the past, the market of hard-leaved pulp was often rising rapidly and falling back quickly, which was very frustrating. Therefore, through the trend of 2006, it can be clearly seen that all suppliers have learned from the past experience and lessons, and changed the 100-meter sprint into a marathon. At the same time, they have a tacit understanding with each other, keep consistent, and take into account the overall situation, forming a situation where the price of hardwood pulp remains high in 2006 as a whole.

3 Whether the pattern of steady climb can be maintained in the near future

From the current point of view, due to the sluggish demand and the impact of alternative raw materials, the spot price of domestic hardwood pulp has been slightly weak, and there is a gap of 200-300 yuan / ton with the current futures cost. The market pressure is obvious and there are many doubts. On the other hand, currencies such as Brazilian real, Chilean peso, and Canadian dollar are still in the process of appreciation, which is difficult to change in the short term, which indirectly increases production costs, prompting suppliers to stick to their selling prices in order to avoid losses. The above two factors restrict each other, and it is unlikely that the price fluctuates greatly. If you want to continue to increase, you need the cooperation of the following factors:

(1) Domestic paper prices continue to maintain an upward trend to recover and even increase demand. In recent months, including white card, copper plate, double glue and white board paper, the price has indeed increased, ranging from 200 to 600 yuan / ton. Both pulp and paper mills do not want to be affected by the weak pulp price. ;

(2) The latest European inventory data shows that it is the lowest point in recent years. The current European economic situation is good, and the demand from Europe is expected to be relatively strong. Therefore, the sales of hardwood pulp mills including Brazil, the United States and Canada to markets other than China are normal and there is no inventory. Pressure, there will be no selling behavior in the market;

(3) The international coniferous pulp inventory is relatively low, and the tense situation of coniferous pulp will not change significantly in the near future, and the current price difference between needle and hardwood pulp is still close to 1,000 yuan/ton, forcing most paper mills to increase the distribution of hardwood pulp as much as possible. Compare;

⑷ October-December 2006 is the peak season for domestic papermaking. Domestic paper mills have limited inventory and strong demand. It is also the centralized maintenance period for pulp mills, which affects the supply. In addition, the supply of mainstream hardwood pulp is concentrated, such as APRIL, APP and other groups, which are not only the largest source of imported hardwood pulp at present, but also control the two major domestic hardwood pulp mills, and have strong control over the market;

⑸ As the hardwood pulp has been hovering at a high level in recent months, traders considered risk factors and received limited goods in the early stage. At present, the domestic inventory is relatively small, and the cost of arrival in the later period is higher, which restricts the bottom line of pulp price decline.

Of course, there are also some negative factors in the market:

(1) In China and Southeast Asia, chemical pulp such as bamboo, reed, bagasse and other resources, such as chemical pulp and BCTMP, have released more production capacity recently, and the replacement effect of hardwood pulp is obvious, diverting a considerable number of hardwood pulp users;

(2) Due to the lag of paper price relative to pulp price, most small and medium-sized enterprises reduce or even stop the use of hardwood pulp, resulting in weak demand;

(3) Some traders are not confident enough to clear their warehouses and ship out, resulting in a drop in market prices.

Brazil's VCP, ARACRUZ and other companies have raised the price of eucalyptus pulp by US$20/ton globally since November 2006, and ARAUCO has also raised the price of its eucalyptus pulp by US$20/ton. Will follow up simultaneously, so by the end of 2006, the price of hardwood pulp remained stable.

4 Will the new production capacity impact the market?

Regarding the newly added production capacity, the company and the media have made special statistics, and I will not repeat them here. At least from the end of 2006 to the beginning of 2007, the production capacity that has been put into the market is relatively limited. Except for one line of ARAUCO, the production time of CMPC's pulp mill has also been postponed, and only a few hundred thousand tons of new production capacity can be fully used by the market. Digestion and absorption. The real peak of production capacity will be from the second half of this year to the first half of next year, and it is not yet known what the market pressure will be at that time. In addition, it depends on how to understand the concept of "shock". If you look at the current price level and market demand, the new production capacity will definitely impact the market, but if you take into account the reasonable price of bleached hardwood pulp and the current steady growth of social demand factors , after the market price moderately fell, the new production capacity can be fully digested.

At present, the global economic trend is generally good, but it is not without the risk of decline. Industrial materials such as gold, crude oil, steel, and non-ferrous metals have all experienced sharp rises, declines, and sharp fluctuations. As one of the industrial raw materials, pulp is also Can't stay high for a long time. The author personally believes that the current round of the hardwood pulp market has basically reached the top, or is close to the top, and all we need to pay attention to is how long it can stay at the top, when to fall back, and how to fall back. Based on the average price in recent years, the reasonable market price range of domestic bleached hardwood pulp should be 450~550 US dollars / ton. The odds are slim, and the odds of a rational pullback are high. And the most likely time point is in recent months, the price may fall back appropriately to meet market demand, thus entering a new cycle.