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October was in many ways similar to September for the European pulp market, with another $100-per-tonne drop in bleached eucalyptus kraft (BEK) pulp prices. There were also more drawn-out discussions about smaller declines for northern bleached softwood kraft (NBSK) pulp.
The hardwood pulp market continues to face a situation where supply outstrips demand. Low prices in China and on the European spot market have also contributed to the past months’ rapid decline in BEK prices. Market analysts consider the NBSK market comparatively more balanced, and they spoke less about spot market activity.
“There is too much pulp and [not enough] demand. That’s it,” a trader said about the BEK pulp market. “The gap between the spot and the list price is too high, so the list price must go down until it reaches spot levels. That’s the normal dynamic.”
Commenting on demand, our sources said that the tissue segment continues to do well, but the picture remains more negative for printing and writing paper. In the specialty and packaging grades, the demand development depends on the product and the trend has been more mixed.
Some pulp producers have been opting for market-related downtime. In Finland, UPM stopped production for three weeks each at its Kaukas and Kymi mills, which produce mainly NBSK pulp, in September-October. Metsä Fibre shut down its Joutseno NBSK pulp mill during the latter part of September, and they expect this halt to last for two months. In Brazil, Suzano has said it will curtail 4% of its production from September until the end of the year.
Even so, contacts said they had not noticed any impact of these stoppages on the European market so far. Some suggested that the downtime might be felt more in China than in Europe.
“Prices are better in Europe than in other markets, so everyone tries to favor Europe, and they keep sending volumes here. It’s when China starts going up in price that the arriving volumes will start decreasing suddenly,” a seller said.
“Over the last months, you see port stocks increasing pretty steeply. If markets are weak, it takes time to adjust. [And] while there is market-related downtime, there are also mills ramping up,” a buyer noted.
Europulp reports that stocks of woodpulp at European ports have risen month by month from 1.2 million tonnes in June to 1.6 million tonnes in September. The September stocks increased by 13.4% compared to the same month last year.
Prices for BEK pulp fell by $100 per tonne to $1,060 per tonne in October. This mirrors the decreases registered in August and September as well. Cumulatively, BEK prices have come down by a total of $380 per tonne since June.
“I didn’t expect prices to drop so sharply,” a buyer said. “Looking back, there have been some intense downcycles, but I didn’t [plan] for this.”
The price decrease is driven by an imbalance in supply and demand globally and low prices for hardwood pulp in China and on the European spot market.
In China, net BEK prices have been stable at $550-570 per tonne during much of October, sliding to $550-560 per tonne toward the end of the month, according to Fastmarkets.
On the European spot market, prices have reportedly also only come down a bit during the past month. This week, contacts mentioned spot business in the range of $540-580 per tonne. This compares to $550-600 per tonne one month ago. Spot prices tend to vary depending on volume, customer, location, and incoterms.
“I have seen $540 per tonne, but I’m not sure why. Prices are lower than in China in some cases, which doesn’t make any sense as freight to China is much lower. To me, this means that the market is not in good shape,” a trader said.
“One interesting thing is that companies were requesting [spot prices of] $500-520 per tonne for a couple of months. We said no, and then they came back and bought at our price. That’s good news,” a seller said.
Price talks were still very much ongoing for NBSK pulp this week in Europe, with buyers pushing for lower prices and sellers holding back. Many discussions centered on decreases of $20-30 per tonne. By Wednesday November 6, contacts reported settling business in the range of $1,500-1,520 per tonne. But negotiations were still not complete in many cases.
Our sources generally described the softwood market as less unbalanced than the hardwood market, but buyers felt there was still sufficient room to demand another price cut. Furthermore, the large decreases for BEK prices also had a hand in pushing the NBSK prices south.
The differential between the NBSK and the BEK price has ballooned in the past few months and currently stands at $440-460 per tonne. This is the widest differential we have ever recorded in our assessments in Europe.
There was less talk about NBSK spot offers in Europe, but a few contacts said that they had seen some deals, particularly in Eastern Europe.
In China, net NBSK prices from North America and Scandinavia moved up from $754 per tonne to $768 per tonne in the middle of October, before slipping down to $765 per tonne later that month, according to Fastmarkets.
The European NBSK market has seen the entrance of a new pulp producer, as the wood processing company Sweden Timber has snapped up the 200,000-tonne-per-year Aspa mill in Sweden from Ahlstrom.
Most of our contacts thought it was natural for Ahlstrom to sell a plant that was not part of the firm’s core business, but many were surprised at the identity of the buyer. Several thought Sweden Timber would consider the Aspa mill a suitable user for its sawmill by-products.
Market participants were divided as to what the future would bring for the European pulp market.
Some believed there is still room for pulp prices to decrease, particularly on the hardwood side, because supply is likely to continue to outstrip demand and sellers will want to get rid of some stocks before the end of the year.
Others thought the relatively stable prices in China and on the European spot market might indicate that European contract prices would bottom out soon.
Next week might generate some more clarity, as sellers and buyers meet at the London Pulp Week to discuss their outlooks for 2025.
Interested in more insights into the European pulp market? You can get a sample of the Fastmarkets PPI Europe newsletter to understand what’s ahead in the paper, packaging and fiber markets for Europe, the Middle East and Africa.