Introduction: in the fourth quarter of 2020, European public health events rebounded, and major pulp and paper enterprises postponed the maintenance of the first half of the year to the fourth quarter, the local cultural paper and special paper market is weak, how will Finland’s pulp supply and demand structure change, and whether the export volume to China will increase or decrease.
The first three quarters: strike superimposed demand reduction, pulp output to nearly three years low
In the first three quarters of 2020, Finland’s pulp output is 5.8 million tons, which is 6% lower than that of the same period last year. In terms of quarter by quarter, the decline rate in the first quarter is the largest, which is the lowest in recent three years, and the second and third quarters are basically the same as last year. The main factors affecting the output change are: first, the strike of Finnish forestry workers from January 27 to February 9, which affected the pulp production and delivery. Kemi pulp and paper mill of metsa group in Finland planned to carry out maintenance and repair from September 14 to 20; second, UPM and metsa delayed the overhaul of their pulp mills from the second quarter to the fourth quarter, so as to ensure stable output in the second and third quarters.
In the first three quarters of 2020, Finland’s pulp export volume was 3.26 million tons, a decrease of 6% compared with the same period last year, accounting for 56% of the total output. The decline rate and proportion of export volume were the same as the same period last year. However, in the second and third quarters, the proportion was 57%, and the proportion of export showed an increasing trend. The main reasons for the change were the decrease in demand for cultural paper caused by public health incidents, the decrease in telecommuting and exhibitions, and the decrease in graphic paper demand from January to September With production down 30.4% from last year, Stora Enso decided this year to reduce the capacity of its paper mill by about 25% and permanently stop or transform the Oulu paper mill in Finland.
Fourth quarter: centralized maintenance reduces production, ocean freight increases costs
Supply: metsa postponed the overhaul of Husum (Sweden) in the second quarter to October, started the one week annual maintenance at laoma pulp mill in Finland on October 31, and restarted on November 6. In the fourth quarter, three Fenbao pulp mills were shut down for annual maintenance; UPM’s Pietarsaari pulp mill in Finland announced the three week maintenance from October 12, and kaukas pulp mill was shut down on November 2 Stora Enso’s pulp mills are mainly located in Sweden (fors, skoghall). Overall, Finland’s pulp output in the fourth quarter was reduced by 120000 tons due to maintenance.
Demand: UPM will permanently close kaipola paper mill in mid December 2020, which will affect paper production of 720000 tons (450000 tons of newsprint and 27 tons of coated paper); Stora Enso will permanently stop the transformation of Oulu paper mill in Finland (450000 tons of kraft paper and 550000 tons of pulp) and paper machines (450000 tons of newsprint) in HYLTE, Sweden.
Freight: due to the increase of insurance premium and covid-19 related expenses, and the local shortage of containers, the sea freight increased rapidly, which increased the transportation cost of pulp export.
Other factors: since the end of November 2020, the control of public health incidents in Finland has rebounded, and the number of new people added on covid-19 has stabilized at more than 350, or the risk of stopping and reducing production in the paper industry has increased.
expectation
The pulp production and export volume of Finland in the fourth quarter showed a downward trend compared with that in the third quarter. With the increase of sea freight, a new round of external markets also rose one after another. Under the influence of public health events, the short-term sea freight may continue to be high, and the cost supports the high price of pulp. In terms of supply and demand structure, the centralized maintenance of pulp mills in the fourth quarter led to the permanent closure of downstream cultural paper. However, with the continuous resumption of production of pulp mills, the demand brought by the permanent closure of some local paper mills in Finland decreased or the proportion of pulp exports increased. As Finland’s largest export destination, China, superimposed with European and American public health events, recovered slowly. It is expected that in the first half of next year Finnish pulp exports to China are on the rise.
Post time: Dec-25-2020