The global pulp market has seen a surge in prices due in 2024 to supply constraints and black swan events, with macroeconomic factors and global challenges set to shape the pulp market in the year ahead.
In our webinar moderated by Fastmarkets SVP Matt Graves, our senior economist Patrick Cavanagh and deputy editor of global pulp at Fastmarkets Bryan Smith discussed key takeaways from London Pulp Week 2024. During the webinar, our experts also analyzed the impact of recent mill closures and downtime and discussed predictions for the pulp market in 2025.
The webinar also included an overview of Fastmarkets’ pulp price reporting methodology and explained our process for ensuring fair, transparent and accurate pricing for various pulp grades.
Register here for a replay of the webinar.
How 2024 has shaped the pulp market
Supply constraints and unforeseen events drove prices up in the first half of the year, including port strikes, the permanent closure of Terrace Bay Pulp in Canada and a boiler explosion at Metsa Fiber in Europe. These led to a global surge in spot prices and contract prices.
“It’s always possible that a ‘black swan’ event is going to come along and shock markets into some kind of pricing momentum change,” Smith said. “Looking forward, this could include mill closures, a sharp upswing and unplanned downtime and bankruptcies.”
Prices peaked in June before a reversal with spot prices dropping and contract prices following suit.
“Downtime has started to happen in eucalyptus, the most oversupplied sector within the global pulp industry, with Suzano – the world’s largest producer – taking 436,000 tons of downtime and Bracel pivoting to dissolving pulp production,” Smith noted.
London Pulp Week: key takeaways
Pat Cavanagh focused on four key themes from his discussions in London: labor strikes in the US, high production costs in Europe, poor sentiment in the Chinese market and finally the impact of the US election.
Disputes in Chile, Canada and the US this year, as well as the ongoing Red Sea crisis, have boosted pulp logistics costs and extended global supply chains.
“The US East and Gulf Coast port strike for three days in October has been delayed to 15 January and could impact imports and exports significantly, especially for BHK and fluff pulp,” Cavanagh noted.
“High producer inventories and the price differential between hardwood and softwood are contributing to downward sentiment in the market.”
Smith noted that the sentiment for hardwood in particular was weak, with larger discounts being negotiated for 2025 contracts and spot markets continuing to decline, while global producer inventories have increased by 1.1 million tons since June.
Global supply and demand trends
Pat Cavanagh highlighted how high wood costs in Europe run the risk of closures, especially for hardwood producers, as prices approach cyclical lows.
Meanwhile, in the global softwood market, significant capacity closures have prompted forecasts of a net decline in supply of 1.84 million tons by 2026.
In China, lower demand has led to a 7% year-on-year decrease in imports into the market, in part due to the industry’s shift to wood chip production. The cost to produce hardwood pulp in China is now above imported BHK prices, reducing demand for market pulp and benefiting integrated producers.
“The sentiment in the Chinese market is still low, with consumer confidence and employment competence declining, which affects pulp and paper consumption,” Cavanagh said.
“This is incredibly important for market pulp, because China is by far the largest consumer of market pulp globally, with more consumed in China than in Europe, North America and Latin America combined in 2023,” he added.
One area where there has been a spike in capacity expansion is Latin America, with the UPM Paso de Los Toros and Aracruz Mapa mills contributing to the current oversupply, and more capacity expected to come online in 2025.
Shaping the pulp market in 2025
According to Cavanagh, “Market-related downtime will play an essential role. We’ve seen it already starting to become an elevated factor. It will continue into the first half of 2025, especially for hardwood, as new assets ramp up their output. Demand growth is expected to catch up to supply growth by 2026, which will tighten market conditions.”
He suggested it was possible to be optimistic about demand, with healthy growth expected for cardboard, specialty papers and tissue to offset a steady decline in printing and writing papers.
The US election and potential tariffs could impact the market, with a stronger dollar eroding the purchasing power of buyers and lowering production costs for dollar-based producers.
Cavanagh ended on a cautionary note for 2025 predictions. “Beware unexpected supply disruptions. We have seen time and again, whether it be a labor strike, a mechanical failure or a natural disaster, that there are a myriad of unexpected situations that can suddenly tighten supply of pulp in the market.”
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