The new trend of Chile’s pulp export in 2020
Public health events in 2020 have led to the increase of uncertainty in the global pulp market. Chile, as a major producer of pulp and a major source of Chinese coniferous and broad-leaved pulp, through the analysis of Chile’s customs export data in the first five months of 2020, it is found that there is a new trend in the export structure and flow direction of Chile’s pulp.
According to Chile customs data, the total export volume of coniferous pulp from January to may 2020 is 650000 tons, down 25% compared with the same period of 2018 and 2019, while the total export volume of broad-leaved pulp in the first five months of 2020 is 940000 tons, down 3% compared with the same period of 2019, still rising compared with 2018. It can be seen that the export volume of coniferous pulp has declined significantly this year, while that of broad-leaved pulp has remained stable. Zhuo Chuang’s analysis mainly includes the following reasons:
Supply side: the production cost of broad-leaved pulp is low, and the production and marketing enthusiasm of pulp factory is high. Chile is rich in forest resources, 55% of its land area is suitable for forest growth. In 2016, the forest covered an area of 24.21 million hectares, accounting for 32% of the land area. The main tree species are Pinus radiata and Eucalyptus. The rich forest resources provide the unique advantages for the development of pulping industry in Chile, and the growth characteristics of the two species also determine the production cost of broadleaf pulp and coniferous pulp. In Chile, the broad-leaved pulp is mainly eucalyptus, with a short growth cycle and a rotation period of 3-4 years, which is conducive to rapid and centralized cultivation; while the coniferous pulp is mainly Pinus radiata, with a rotation period of 20-25 years, with a cultivation cost far higher than Eucalyptus. According to the data released by Chilean pulp mill, the cash cost of broad-leaved pulp in the first quarter of 2020 is lower than that of coniferous pulp by 120 US dollars / ton, and the profit space is large, so the pulp mill has a high enthusiasm for production and sales.
Demand end: the price difference between needle and broad leaf expands and the demand for coniferous pulp decreases. It can be seen from Figure 1 that in the past three years, the average export price of bleached chemical pulp in Chile has continued to decline, while that of broad-leaved pulp has a larger decline, resulting in the price difference between coniferous pulp and broad-leaved pulp reaching 95 US dollars / ton in the first five months of 2020, which is more than four times of the same period in 2019. The widening price difference and the falling price of broad-leaved pulp make the downstream paper mills keep reducing the use proportion of coniferous pulp under the condition of ensuring normal production.
In the first five months of 2020, Chile’s largest export destination of coniferous pulp is still China, accounting for 4% lower than the same period last year, 7% lower than Asia, and 6% higher than Europe. In the first five months of 2020, Chile’s largest export destination of broad-leaved pulp is also China, accounting for an increase of 10 percentage points compared with the same period last year, the total proportion of Asia increased by 7 percentage points, and the proportion of Europe decreased by 8 percentage points. The export proportion of coniferous and broad-leaved pulp has little change, while the export center of broad-leaved pulp is inclined to Asia. The main reasons are as follows: first, public health events in China and other East Asian countries have been well controlled, and the paper mill will actively prepare pulp raw materials after resumption of production; second, the difference between coniferous and broad-leaved pulp mentioned before has been enlarged, and the production cost has been considered, and the domestic paper mill will increase the proportion of broad-leaved pulp purchasing.
Supply side: in the short term, some coniferous pulp plants in Canada announced the maintenance plan, while Brazil pulp plants delayed the maintenance in the first half of the year. Chile’s supply side of broad-leaved pulp is under great pressure of competition, while the supply of coniferous pulp may increase. In the long run, after the production of the mapa project of Arauco company, the supply of broad-leaved pulp increased significantly, and the supply proportion of broad-leaved pulp increased in the later period; the cost of Chilean coniferous pulp was lower than that of North America and Northern Europe, and the supply stability was strong.
Demand side: in the short term, there is a turning point in the epidemic situation in major European pulp consuming countries, such as Italy and Germany. It is expected that local paper mills will resume production in succession or have a centralized stock period. Although the resumption of work in the Chinese market is good, April to July is the traditional off-season of paper products in the downstream of the pulp system, with slow consumption of raw materials, and the supply focus of Chile’s broad-leaved pulp may be revised. In the long run, first, in the next five years, most of the new capacity in the downstream of the pulp system in China will be pulp paper integration projects, which will reduce the dependence on imported broad-leaved pulp; second, the gradual implementation of China’s plastic restriction order will highlight the substitution of white cardboard for white board paper, and increase the consumption of pulp; third, the public health event will lead to the postponement of the delivery cycle of new capacity in the downstream of Europe and America. Zhuo Chuang expects Chile’s pulp delivery pressure to increase.
Zhuo Chuang analysis shows that Chile, as the main source country of pulp import in China, produces pulp with the characteristics of high circulation, high adaptability and low cost. As a pulp futures delivery product of the previous period, the short-term domestic market purchase volume maintains normal range finishing. It is suggested to pay attention to the announcement of Arauco and cmpc maintenance plan.
Post time: Jun-12-2020