The price of wood pulp has increased due to the increased demand for premium napkins and toilet paper during the Covid-19 pandemic.
Since 2020, the global economy has been greatly affected in all aspects, reflected in various industries. Fundamentally speaking, the changing trend of wood pulp prices in raw materials also directly affects the prices of all types of paper. As can be seen from a report on wall street:
After the long Spring Festival holiday, the price of softwood pulp futures on the Shanghai Futures Exchange continued to rise. Negotiations for March shipment orders in the external market have not yet started, but there are signs that prices are also rising.
Global Wood Pulp Market 2021 Development
Wood-pulp prices are soaring due to a weaker dollar and people using restrooms at home instead of at the office. More people are returning home during the Covid-19 pandemic, resulting in increased demand for napkins and toilet paper.
Since December 1, softwood bleached kraft pulp futures on the Shanghai Futures Exchange have risen 48% to approximately US $1,036 per ton. While producers around the world have raised log prices to unusually high levels.
China purchases more than 1/3 of the world’s pulp and produces paper and packaging products. The demand for origin wood pulp instead of recycled cardboard and paper has been growing, which limits the import of waste materials originally purchased by ships to provide feed to factories. Analysts say that pulp producers in Europe and North America have been turning from the local spot market to China to capture rising prices.
Despite the poor performance of pulp for most of 2020, the Covid-19 pandemic shook the paper product market and laid the foundation for a rebound in demand.
The biggest change comes from the bathroom and kitchen. There will be more time at home during the pandemic, which means that the demand for high-quality paper, napkins, and paper towels made from origin pulp will increase, and for rough items made from recycled materials in offices, restaurants, and other places, the demand will decrease.
Pulp has also been boosted due to the weakening of the U.S. dollar, making it cheaper for buyers in China and other regions. Like many other commodities, the pulp is priced in U.S. dollars. In the past year, the Wall Street Journal Dollar Index, which measures the exchange rate of the U.S. dollar against other currencies, has fallen by about 5%.
US Average price for scrap paper
As futures prices and trading volume are still high after the holiday, the quotation of Russian Ilim Group's softwood pulp has been raised by US $90/ton to US $880/ton; the quotation of hardwood pulp has risen to the US $700/ton, an increase of US $120/ton. Market sources expect other suppliers to follow up.
Price negotiations in March will be more difficult. Canadian suppliers have sold orders shipped in April at a price of US $900/ton, which is unchanged from the highest price in history at the end of 2017. At the same time, Chinese buyers are cautious, hoping to understand whether prices will continue to rise and how long they can stay high.
A "radical" struggle against containers has led to a 300% increase in transportation costs
Another issue that each of our customers is concerned about is shipping costs. The pandemic and uneven global economic recovery have led to the sea freight rising cropping up in Asia, although other parts of the world have also been hit.
Sea freight rates have been rising, the prosperity of the global shipping sector has been rising too. At the same time, the rapid growth of global international trade and domestic demand, the adjustment of trade structure, the increase in crude oil prices caused by production cuts, and the maritime peak caused by strong coal demand have all contributed to the continuous surge in maritime prices.
Industry watchers said desperate companies wait weeks for containers and pay premium rates to get them, causing shipping costs to skyrocket.
In December 2020, spot freight rates were 264% higher for Asia to North Europe route, compared with a year ago. For the route from Asia to the West Coast of the U.S., rates are up 145% year over year.
Compared with last March’s low prices, freight rates from China to the U.S. and Europe have surged 300%.
Redwood Logistics CEO Mark Yeager told CNBC that compared with the low prices in March last year, freight volumes from China to the United States and Europe have increased by 300%. He said that the spot price can rise to US$6,000 per container, while the usual price is US$1,200.
There are a few factors stemming from the pandemic driving this phenomenon. Trade surplus furthers container imbalance
First, China is sending out a lot more exports to the U.S. and Europe than the other way round. Its economy bounced back faster as the virus situation within its borders was basically under control by the second quarter of last year. As a result, containers are stuck in the West when they are really needed in Asia.
The shortage is further exacerbated by limited air freight capacity. Some high-value items that would normally be delivered by air, such as iPhones, now have to use containers via sea instead, according to Yeager.
A report by the Shanghai International Shipping Research Centre released in the fourth quarter last year, which said that the shortage issue is likely to last for another three months or more.
The Shipping cost of Asia port 21st to 29th Jan
Relevant people predict that this year's global economic growth will be close to 5%, which is the fifth consecutive year of strong growth. On the contrary, since the beginning of the year, the popular routes have maintained a state of full warehouse shipments and high freight rates. Take the European route with a large number of containers, the US West Route and the US East Route as examples. Starting from the end of last year, each TEU has risen from the US $950, US $1700, and the US $3,300 to the US $1500, US $1900, and the US $3700, showing strong upward momentum.
Chinese tech giant Alibaba’s logistic arm Cainiao launched a container booking service last week, citing the global shortage. It said its service would span over 200 ports in 50 countries, and port-to-port shipping fees would be 30% to 40% cheaper, according to Reuters.
But even the race to build more containers could be hobbled by delays, according to Yeager. He said the pandemic has also hit the supply of steel and lumber needed to build containers.
To our dear customers:
The trend of the international market has been unchangeable within months, in this circumstance, Subtextile now informs all of our dear customers that the paper prices will also be adjusted in accordance with this international market. We will also actively adjust our strategies and work through difficulties with our customers. Thank you very much for your understanding and support. 2021 Subtextile will continue to be with you.
Subtextile Co. Ltd.
Address：699-18 Xuanwu Avenue, Nanjing City, China, 210000
Tel |Fax：+86 25 85416407 (GLOBAL)
Cell：+86 17798509616
Whatsapp：0086 17798509616
E-mail：[email protected]
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