Mark Wilde, formerly of Deutsche Bank, now Packaging & Forest Products Analyst at BMO Capital Markets, this week held a conference call on the global pulp market with fuest speaker Brian McClay, principal at Brian McClay & Associates out of Montreal, QC.
This week Mark Wilde, formerly of Deutsche Bank, now Packaging & Forest Products Analyst at BMO Capital Markets, held a conference call on global pulp. Guest speaker Brian McClay, principal at Brian McClay & Associates out of Montreal, QC, provided details on current NBSK (softwood, or market pulp) and BHK (hardwood pulp) supply and demand, and prices, as well as a forecast.
Pulp Market Update: 2015 and Forecast
“There have been major pattern changes in the past ten to twelve months,” explained McClay. “Especially in hardwood pulp.”
It seems price strength of market pulp has sent customers, particularly those in China, to switch to hardwood pulp. Since early 2014 shipments of hardwood pulp have surged, after dropping to a bottom in the middle of the year. Consequently, “market pulp prices will drop lower as hardwood pulp prices are grinding higher,” said McClay.
Global tissue demand is growing faster than that for newsprint, at a rate of about 4 per cent a year. McClay detailed that it is not easy to find additional volumes of hardwood pulp, while softwood pulp is “a little more available.”
There is no new softwood pulp supply expected to come online until mid-2015, which means the price gap between hardwood and softwood pulp will narrow during 2Q this year, explained McClay.
Trend demand for the remainder of 2015 is for a 4 per cent increase in hardwood pulp demand and a 2 per cent increase for market pulp compared to last year.
Expectations for remainder 2015 global paperboard demand is a 1.5 per cent increase, while for tissue at 2.5 per cent increase over 2014 is expected.
By 2018/19 China demand will push hardwood pulp prices up, causing another shift in buying from that country, this time back to softwood pulp.
McClay made special mention that “Vietnam is looking to limit exports of wood chips to China.”