In July, the Bleached Eucalypt Kraft (BEK) pulp rose 1.0% (USD5/t) to USD510/t in the main market in China, as markets stabilize. Inventories remaining large, but in better balance than over 1H23.
The Bleached Softwood Kraft (BSK) price fell 3.0% in July in China to an average USD655/t.
As a result, the differential between the two pulp prices narrowed again to USD145/t. Over the last decade the spread has averaged exactly USD100/t, providing some sense of the order of magnitude of the current spread and its previous record heights.
The spread coming back toward the long-term average is an indicator of a return to some stability in the commodity pulp market.
Elsewhere in global pulp markets, the declines are still being recorded, especially in the USA and Europe, as the table below demonstrates.
To the end of May, the leading global pulp market specialists, Hawkins Wright, reported that for the main chemical pulp commodities, producer stocks sat at 52 days for BSK (up 14 days on May 2022) and 59 days for BEK (up 17 days on May 2022). Port stocks in China, but especially in Europe were also markedly higher, suggesting there may be more pain for pulp prices in Europe.
China Chemical Pulp Prices by Grade and Spread: Jan ’13 – July ‘23 (USD/t)
Global Chemical Pulp Prices: May ‘23 (USDCif/t)
|
Region |
BSK |
BEK |
||
|
|
Prices |
Change on Prior Month |
Prices |
Change on Prior Month |
|
North America* |
1,340 |
-90 |
1,070 |
-100 |
|
Western Europe |
1,200 |
~ |
800 |
-50 |
|
China |
655 |
-20 |
510 |
+5 |
|
Korea |
835 |
– |
525 |
-45 |
Source: Hawkins Wright, Brian McClay & Associates, Pachem and IndustryEdge research
* Delivered
AUSTRALIAN PULP MARKET
Australia’s total pulp imports rose 82% in June, compared with the prior month, lifting to 33.4 kt. The last several months have seen lumpy trade for pulp in what is normally a metronomic market. With the significant bulk of supply going direct to the tissue sector, which is completely reliant upon imports for its virgin fibre needs, importers and tissue producers alike are very committed to a stable market. Availability and price, as well as shipping schedules have been reported to IndustryEdge as driving the more fractious recent market.
At 346.1 kt year-ended June 2023, imports were 0.6% lower than for the prior year.
The monthly weighted average import price was AUDFob1,035t, down 5.1% on the prior month, but still up 9.0% on June 2022.
Australian Pulp Imports by Grade: Jan ’20 – June ‘23 (‘000 tpm)
Source: ABS, derived and IndustryEdge
Imports are perpetually dominated by three grades: Unbleached Softwood Kraft (UBK), used as cement board stabiliser and potentially in the production of Kraftliner for corrugated boxes, Bleached Softwood Kraft (BSK) and Bleached Hardwood Kraft (BHK), that despite their versatility are imported into Australia primarily for tissue production.
Australian Pulp Imports by Grade: YE Jun ’22 v YE Jun ‘23 (kt & %)
|
kt |
Mech |
UBK |
BSK |
BHK |
Semi-Chem |
Diss |
Bam |
Other |
Total |
|
Jun-22 |
2.0 |
47.4 |
118.7 |
156.0 |
1.9 |
0.4 |
0.8 |
20.9 |
348.1 |
|
Jun-23 |
1.9 |
42.9 |
105.1 |
182.3 |
5.7 |
0.6 |
0.1 |
7.4 |
346.1 |
|
% Change |
-3.2% |
-9.4% |
-11.4% |
16.9% |
197.3% |
35.0% |
-83.9% |
-64.4% |
-0.6% |
*Diss = Dissolving Pulp, Bamb = Bamboo
The annualised comparison of pulp import volumes shows ongoing growth for Bleached Hardwood Kraft (BHK), some fluctuations for Unbleached Softwood Kraft (UBK) pulp followed by recent growth, and stability for Bleached Softwood Kraft (BSK) pulp.
Annualised Australian Pulp Imports by Main Grade: Jan ’12 – Jun ’23 (INDEX: Base = Jan ’12)
Source: ABS, derived and IndustryEdge
Australian pulp price differential
In June 2023, the average BSK price was AUDFob1,2 13/t while the BHK price was AUDFob899/t, dragging the differential back from the all-time high recorded the prior month, but still at an incredible AUD313/t or 26% in favour of BSK.
In US dollars, the differential in June 2023 was USD210/t or 50% greater than the differential for the same grades in China
The recent price experience is shown below, noting that the chart is in US dollars.
Australian Imports of Pulp by Main Grade: Jan ’20 – Jun ‘23 (USDFob/t)
Source: ABS, RBA and IndustryEdge
