Market pulp is a critical global commodity within the pulp and paper industry. As such, market pulp is a constant fixture in global trade flows because of its primary role in manufacturing numerous paper grades.
Market pulp prices have always been volatile and kraft market pulp, in particular, saw some of its lowest prices in the last 10 years in 2020. However, 2021 has brought price increases with skyrocketing spot prices in February and early March. Between December 1, 2020 and late February 2021, bleached softwood kraft futures were up 48% on the Shanghai Futures Exchange (SHFI), and additional price increases have been announced, leaving buyers wondering what has happened and when it will end.
Source: FisherSolveTM Next 2021 Fisher International, Inc.
Figure 1
Mill closures – Although Printing & Writing (P&W) mills in North America and Europe are typically integrated while making their own pulp, some do require bleached kraft market pulp, as well (Figure 2). This market was hit hard in 2020, which resulted in a lack of order downtime and even permanent closures. While there was also some lack of order downtime and closures of market pulp lines in 2020 in response, it was not nearly at the same percentages as P&W. These changes to the supply/demand balance for market pulp factored into last year’s low prices. The return of some P&W demand has, in turn, contributed to the current demand for kraft market pulp returning.
Source: FisherSolveTM Next 2021 Fisher International, Inc.
Figure 2
Due to the global nature of the pulp market coupled with these developing – and ongoing - factors, pulp producers will end up selling to whomever and wherever they can get the best price, assuming that freight options are available. For example, why send market pulp to Europe if you can get a better price in China? Such a competitive market dynamic will create a shortage of supply in Europe, driving the prices there higher. Market pulp consumers are also limited by what they can utilize as substitutions, as this can impact finished product quality and machine runnability.
Source: FisherSolveTM Next 2021 Fisher International, Inc.
Figure 3
New pulp capacity is going to be coming online, however this will not happen anytime soon (Figure 3). We expect prices will continue to increase in the near-term, although perhaps at a slower pace, after the next set of announced price increases are released.
In a global market, it’s important to stay on top of these trends - especially those that are so critical for manufacturers in the paper industry. To see what’s happening in the pulp market around the world or in your own backyard, talk with a Fisher expert today about the unique modules available via FisherSolve Next that are designed to help you improve your decision-making process with the most robust pulp and paper data available to the industry.
Joanna’s experience in providing project management guidance and leadership for cross-functional and cross-division projects makes her a strong asset to the Fisher team. She balances diverse competencies including manufacturing processes, audit and metrics tracking, needs assessment, training, and team-building with a keen ability to meet or exceed budget and cost-saving goals on the various projects with which she is involved.
With over 20 years of paper industry experience, Joanna Wilhelm brings exceptional project management and operational leadership skills to her position as Senior Consultant.