Tissues and Tariffs: The Double Whammy at CIDPEX 2024

Ah, China in spring! A bustling haven where the East meets the West, and business buzzes louder than a Beijing street market. I found myself in this energetic whirlwind for CIDPEX 2024, the holy grail for hygiene products and production machinery, strategically timed to coincide with the famed Canton Fair. This year’s expo flaunted a smorgasbord of local Chinese products and cutting-edge manufacturing tech. While the promising adult diaper market caught my eye, it was the avant-garde Air-laid Tissue and Colored Air-laid that truly stole the show. Mingling with top-tier tissue producers and freight forwarders, I gathered some golden nuggets of industry wisdom.

The Shipping Saga: From Shanghai To Mombasa

Conversations with freight forwarders in the cosmopolitan hubs of Shanghai and Hong Kong were nothing short of enlightening. Their forecasts, as precise as a Swiss watch, indicated significant upheavals in global shipping lanes. Although the tremors haven’t yet reached ports like Singapore, Seoul, and India’s coastal cities, a tidal wave of changes is imminent. Here’s a snapshot of the freight hike frenzy:

  •  Jebel Ali: Rates skyrocketed from USD 2000 in April to USD 3500 in May.
  •  Caucedo: A steep climb from USD 2800 in March to USD 8000 in May.
  •  Mombasa: Spiked from USD 1800 in April to a jaw-dropping USD 7500 in May.

Let’s delve into some of the rippling trends shaping these dramatic shifts:

  1. European Detours: Trouble in the Red Sea has ships rerouting around the Cape of Good Hope, elongating transit times, clogging transshipment ports, and leaving containers stranded.
  2. South American Surge: Anticipated duties in Mexico and Brazil have spurred a shipping spree by automakers and exporters, diverting vessels from West Africa and triggering a General Rate Increase (GRI).
  3. US Election Jitters: With the looming election and promised tariffs on Chinese goods, Chinese companies are ramping up investments in Latin and South America. The pre-election stockpiling is in full swing, pushing the peak shipping season into overdrive.
  4. Industry Consolidation: Fewer, bigger players mean coordinated rate hikes and container shortages, forcing Chinese exporters to book space months in advance, straining the supply chain.
  5. Surpassing Pre-Pandemic Peaks: Freight rates to some ports now exceed pre-pandemic levels. Shipping lines invoking Force Majeure to cancel contracts adds another layer of chaos.

Industry Trends: Capacity, Demand, And The Pulp Puzzle

The paper and pulp industry isn’t sailing any smoother waters. Here’s what’s happening:

  1. Overcapacity Woes: Fueled by low interest rates and government spending, China is on the brink of a capacity crisis. The uncoated woodfree paper sector is stable, but tissue and packaging board face a deluge. With an estimated 1 million TPA in tissue, 2.5 million in packaging board, and 3 million in pulp set to flood the market by 2025, overcapacity is a looming specter.
  2. Domestic Demand Dip: An aging population is dragging down China’s domestic demand, turning the nation more towards exports.
  3. Non-Integrated Mills’ Dilemma: High pulp prices and low finished paper prices are squeezing non-integrated mills, paving the way for industry consolidation. Integrated mills might manage to juggle high pulp and low paper prices until this shakeout happens.
  4. Pulp Prices Stubbornly High: Contrary to expectations, pulp prices remain buoyant despite weak global demand, thanks to forward integration by major producers. This trend is set to persist through year-end, driven by increased Latin American pulp supply, weakening American and European demand, the easing of Russian sanctions, and falling global finished paper demand.

Navigating The New Normal

Despite these tumultuous times, there lies a silver lining—an opportunity to enhance customer service through value addition rather than mere pricing games. If you find yourself adrift in these choppy waters, Coniferous is here to help you steer the ship. Here’s to a fantastic weekend and forging stronger connections ahead!

In the grand tapestry of global trade, CIDPEX 2024 was more than an exhibition; it was a crystal ball, offering glimpses of the future while navigating the complexities of the present. And if there’s one takeaway, it’s that the only constant in this industry is change. So, buckle up and stay ahead of the curve!

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