Brazil and Indonesia to reduce pulp supply to stabilize the market

Brazil and Indonesia to reduce pulp supply for China

In order to stabilize the market, Brazilian suppliers cancelled their pulp deliveries to China, while Indonesian companies solved the problem by cutting production output.

The sharp decline in the price of hardwood pulp in China has seriously affected pulp producers from Brazil and Indonesia. In particular, three Brazilian pulp producers plan to cancel delivery to China in January 2019.

Leading Indonesian producers are also trying to maintain the price of USD 750 / ton. However, some other suppliers chose to compromise, reducing BHK prices to USD 620 - 630 / ton in December 2018. That price remains unchanged during the first two weeks of January 2019. In November 2018, a number of large factories joined with traders to put pressure on suppliers, demanding a cut of USD 100 / ton for BHK pulp which is now priced at USD 770-780 / ton. In December 2018, they increased their pressure and demanded a price reduction of USD 600 / ton for this kind of pulp.

While Brazilian suppliers cancel their pulp deliveries to China, Indonesian companies solve the problem by cutting production. Asia Symbol, a subsidiary of Indonesia Asia Pacific Resources International (APRIL), has converted the production of hardwood pulp on a 300.000 tons / year line in Rizhao, China to produce paper pulp since December 2018. In the past week, APRIL also stopped manufacturing one of the three BHK lines at its flagship facility in Kerinci in Sumatra, Indonesia. According to Chinese customs data, the total volume of imported BHKs reached 10.5 million tons in the first 11 months of 2018, of which Brazil and Indonesia were the top two suppliers, with 5.7 million tons and 2.3 million tons, respectively.

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Source: VPPA