What's lurking beneath the surface?
The most recent pulp price rally has been the fastest, steepest the pulp market has ever seen, with NBSK rising by almost 70% in just 6 months. Recently, prices in China have started to roll over. Could this be the start of an equally dramatic fall in prices?
- China, which accounts for around 38% of market pulp consumption, was the main driver behind the recent rally.
- Other regions are now playing catch-up. North American NBSK prices are also now at record highs and Europe’s are very close.
There were many fundamental reasons for the surge in prices: demand picked up from pandemic lows; unexpected downtimes
and shipping constraints hampered supply; stock levels were tighter than in 2020; and there was general a rally in commodities prices since the start of the year.
Prices in China are now retreating from record highs. Seasonally weak paper and board demand has combined with oversupply to
pull paper and board prices lower. This has resulted in deteriorating margins, and along with China’s commitment to combat speculative pressure in commodity markets has placed strong downward pressure on pulp prices.