Navigating the Price Landscape: Insights from Coniferous

In the dynamic realm of packaging economics, recent times have unveiled a captivating display of price fluctuations and trends. At Coniferous, we believe in keeping you not just informed but deeply engaged with the unfolding narrative. As we delve into the heart of the matter, let’s explore the intriguing developments that have been shaping the landscape.

Over the past few months, a curious scenario has emerged, underscored by a notable descent in prices. A symphony of factors, including reduced demand and corrections in pulp prices, have taken center stage. A recent expedition to China, orchestrated by our team, provided an opportunity to connect with mill owners, traders, and end users. What emerged from these discussions was not only enlightening but also provided valuable insights into the current state of affairs.

Here are the key highlights that we uncovered:

  1. Strategic Stock Movements: Mills and converters have strategically maintained low stock levels, anticipating price adjustments. This foresight has triggered a surge in demand as industry players strive to replenish their stocks.
  2. Pulp Price Surge: The pulse of the pulp market in China quickened, with prices scaling new heights by a staggering USD 80 in recent weeks. This uptick is set to cast its shadow on forward prices.
  3. An Uphill Price Trajectory: The local pricing landscape in China has experienced a palpable elevation, witnessing a USD 50 upswing over the past three weeks. While export prices may currently enjoy a temporary advantage, this equilibrium is anticipated to be short-lived.
  4. The Resilience of Local Demand: As the world grappled with the pandemic, Chinese local demand experienced a lull as people sheltered at home. However, a gradual resurgence has been witnessed over the last two months, catalyzed by factors such as rising hotel costs and heightened occupancy rates.
  5. Government Interventions: The Chinese government’s strategic measures to bolster liquidity have acted as a stimulant for local demand. Encouragingly, the rekindling of demand is not limited to domestic shores, with signs of rejuvenation emanating from the European market as well.
  6. The Pulp Conundrum: The entry of additional pulp capacity into the market has swiftly been absorbed. As certain European pulp plants shut their doors permanently, and pulp producers adopt an integrated approach towards finished paper production, the pulp market is poised to maintain its vigor until the dawn of Q1 next year.
  7. Projections and Pathways: While the landscape of packaging board prices is anticipated to exhibit stability, the horizon for Tissue and Paper prices is painted with ascending trajectories. The surge in packaging board supply, courtesy of expanded capacity, contrasts with the scarcity of new Paper and Tissue capacity until 2024.
  8. The Freight Factor: Brace yourselves for a surge in freight costs come September. This impending rise is poised to resonate in the realm of CIF pricing.

In summation, as we gaze into the future, a subtle crescendo in prices is on the horizon, poised to grace the stage from September until the year’s end. While the zenith of pricing heights witnessed in the past may remain beyond immediate reach, the current landscape of subdued prices is not likely to persist indefinitely. At Coniferous, we stand committed to providing you with a ringside view of these price dynamics, ensuring that you remain well-prepared to navigate the undulating terrain ahead.

Stay tuned, for we shall continue to illuminate your path with the latest updates and insights.

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