Global Pulp Figures Better-Than-Expected

Wilde further reports that, according to data released by the Pulp & Paper Products Council, November global pulp shipments increased on a m/m and y/y basis, up 2.7% and 1.4%, respectively. Hardwood shipments were up 10.4% m/m, largely due to higher shipments into China. This sequential improvement was somewhat offset by softwood shipments (-3.5% m/m). Inventories declined by two days to 32 "days of supply." These numbers were stronger-than-expected and should help to support pulp prices, Wilde notes.

Pulp production rose in November, with operating rates climbing from 87% in October to 92% in November, Wilde adds. Global shipments also increased by 92,000 metric tons to 3,348,000 metric tons. Despite higher production levels, both softwood and hard wood inventories decreased by one day of supply: (1) hardwood fell from 43 to 42 days, and (2) softwood fell from 26 to 25 days.

Shipments to purchasers in Latin America and China showed the strongest m/m comparisons, up 10.8% and 14.2%, respectively, according to Wilde. The improvement was muted by weaker shipments to Japan (-5.4% m/m) and Western Europe (-1.9% y/y). Despite weaker paper volumes in North America, pulp shipments increased 1.3% m/m and 2.7% y/y.

With demand trending positive and inventories in check, the November figures look positive for pulp producers, Wilde points out. Three large pulp producers, Arauco, Botnia, and Domtar, have just announced $10/metric ton increases for softwood pulp to China in January, suggesting that they are also seeing bullish signals in the market.