Bleached Pulp Market More Balanced in 2019: Demand Outpacing Supply in Medium Term
Global pulp prices moved lower in late 2018, as supply recovered in the second half of the year and demand growth slowed in China. Prices for both bleached hardwood kraft (BHK) pulp and bleached softwood kraft (BSK) pulp started declining in China in November, and buyers have increased pressure on sellers since, in an attempt to force listed prices lower in early 2019.
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“Overall, pulp markets should be more balanced in 2019,“ according to Andres Padilla - Senior Analyst F&A Supply Chains. ”Demand will grow less with the slowdown in the Chinese economy but supply will grow marginally at best, with no new lines entering production and most ramp-up phases completed from lines started in 2016-18.” Trade tensions between China and the US should be monitored closely, as a favourable outcome from the negotiations could help boost demand – and equally, a protracted trade war could worsen projections. Looking ahead globally, no new significant lines of either BHK or BSK pulp will enter production in 2019/20, and there are few firm projects for 2021 and beyond.
This will mean tight pulp markets in the medium-term as demand from China and other emerging economies continues growing, and developed market consumption declines gradually. A faster-than-expected slowdown for the global economy remains a risk for demand, in particular if both developed and emerging markets enter a phase of sluggish growth or worse.