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Investing.com -- Hardwood pulp prices in China fell 0.1% week-over-week and 13% month-over-month, according to UBS data tracking import prices. The significant price decline has prompted major supplier Arauco to stop offering South American hardwood kraft pulp (BHK) to Chinese clients in May and June.
Pulp suppliers are attempting to stabilize the market in June with hopes for a potential price increase in July. APP announced a $20 per ton price hike on Indonesian BHK at the end of May, but Chinese customers successfully pushed back against similar increases for Latin American imports.
The softwood pulp market is experiencing similar pressure, with NBSK (Northern Bleached Softwood Kraft) import prices dropping 0.2% week-over-week and 12% compared to three months ago. Buyers are anticipating further price declines despite suppliers’ resistance to additional reductions.
High inventory levels at ports and weak demand continue to weigh on the market. Finnish producer Metsa Fibre has announced five weeks of downtime at its Kemi mill (1.5 million tons annual capacity) and a temporary shutdown at Joutseno (690,000 tons annual capacity), citing weak Asian demand.
UBS analysts suggest pulp prices may be approaching their bottom, noting that current levels are pushing into the cost curve and that the US-China trade deal has removed the most bearish demand scenarios. However, with paper and board demand expected to remain weak during the traditionally slow third quarter, buyers anticipate South American hardwood pulp imports could fall further.
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