Global Pulp Market Update


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

โ€œThere have been major pattern changes in the past ten to twelve months,โ€ explained McClay. โ€œEspecially in hardwood pulp.โ€
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, โ€œmarket pulp prices will drop lower as hardwood pulp prices are grinding higher,โ€ 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 โ€œa little more available.โ€

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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.

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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 โ€œVietnam is looking to limit exports of wood chips to China.โ€