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Latin America BEK pulp manufacturers raise prices across the board and shift shipments from Europe to Asia!
The Global Printing and Packaging Industry 2023-08-31 08:59 was published in Taiwan, China
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Brazil's Suzano, the world's largest producer of bleaching eucalyptus kraft pulp (BEK), announced on August 18 a new round of price increases for all orders in September, with $20 per ton in Asian customers and $50 in North America and Europe.
Fastmarkets In Europe, the company is seeking to reach $850 a tonne next month, it has learned. Other pulp producers began talking to customers separately, seeking the same price increases, including El Dorado and Crabin, as well as other Latin American producers. Klabin notified the customer on August 21, and Eldorado notified the customer on August 22.
The gap in pulp prices between China and Europe is "too small"
Supply sources told Fastmarkets that producers believe the price bottom in China is too low and the price gap between the region and Europe is too small."When we talk about China, we have to consider that prices are shipped directly to customers from Brazil, while in Europe, shipping costs, port handling and inventory are all controlled by the producers, so prices lower in Europe than in China are meaningless," one source said.
Given the latest PIX index on August 22, the difference between broad-leaved wood pulp prices in Europe and China is only $268 per tonne."If we take into account that the discount in Europe is 36% or higher and the price announced in China is net, we actually see lower prices in Europe, which causes pulp producers now moving all possible funds to China," the second market source said.
Several supply sources say companies are currently reducing shipments to Europe, potentially feeling the impact when the region's peak season begins."Some customers in Europe have become used to not dealing with inventory because pulp producers produce too much. But as the pulp volume shifts, we will see an inventory decline in the region, " a third source commented.
Prices have hit bottom, and demand is stable?
Fastmarkest Market participants contacted are cautious about China's macroeconomic situation and have shown bearish prospects in the coming months."Paper makers do not want prices to fall further, integrated suppliers do not provide pulp to prevent price pressures, and there is new paper capacity requiring pulp. Pulp panic selling in a few months, leaving prices below production costs —— we don't think this will happen again, " the second source added.
The fourth source detailed: " In fact, producers are shifting exports from Europe, but they are looking not only for China, but also other Asia-Pacific markets, the Middle East and Africa, as well as Latin America and North America. China's demand is growing well and can absorb future demand.”
Fastmarkets Other sources contacted also said that the spot market was now accepting higher prices at this point. On the other hand, some analysts studying the pulp market remain pessimistic about China's demand for all pulp that can arrive to the country. Mascio Farid of Goldman Sachs said in an August 11 article: " The current bull market scenario will be driven by a rebound in shipments in Europe (late summer / destocking) and seasonal improvements in China. But that still needs to be coupled with weak supply caused by unexpected disruptions. Our basic forecast remains that pulp prices are unlikely to continue to rise and that there is still too much supply in the market to absorb.”
Brazil's BEK exports to China hit a record high in July
Brazil exported a record 1 million tonnes of BEK to China in July. This is the first time that the Asian giant has bought so much in a single month since 1997, according to the Foreign Trade Secretariat (Secex), part of the Ministry of Development, Industry, Trade and Services (MDIC).
The actual purchase quantity of BEK in China in the month was 1.012 million tons, up 33.02% from 761,026 tons in the same month of 2022. This is also increased 56.2% from June 2023, with 647,893 tons in June 2023. Brazil's BEK exports totaled 1.79 million tonnes last month, with China accounting for 56 per cent. From January to July, Brazil exported BEK 511 tons to China. In 2022, Brazil's total sales to foreign markets were 8.33 million tons.
Fastmarkets Senior economist Patrick Kavanagh said China's recent acquisitions indicate an increase in replenishment demand in China. He said: " Demand has picked up and shipments in Brazil are shifting from a weak market in Europe to China. This could lead to a tightening of conditions in European markets, but it could also lead to oversupply in China.”
In July, Brazil exported 251,196 tonnes to the EU, down 43.65 percent from 445,785 tonnes in the same period last year. Fastmarkets Minnie Kong, an economist for fiber economy analysis, pointed out that pulp shipments from Brazil to China have increased significantly since Suzano added a new pulp production line in 2017 and Golden Eagle launched the Brussels plant in 2021. Brazil's BEK's share of China's imports has risen from 45 per cent in 2017 to 63 per cent in 2022.
Translated from Fastmarkets, please respect the translator's labor, reproduced, please indicate from the "global printing and packaging industry"
