Logistics strikes in Finland and forest fires in Chile have unnerved participants in the Chinese pulp market, who raised concerns over worsening softwood pulp availability already exacerbated by a woodchip shortage in Canada.

According to sister publication PPI Europe, industrial action across the Finnish logistics sector has begun this week. Stevedores at Finnish ports, terminal operators, and workers in the trucking, tanker and oil products industries all went on strike on Wednesday, and the Finnish Transport Union has announced new strike warnings from March 1.

Major suppliers such as the Metsä Group and UPM have flagged up possible shipping delays due to the strikes from Finland to customers in China and other Asian countries, said contacts.

Domestic bleached softwood kraft (BSK) pulp resale and the grade’s futures on the Shanghai bourse reacted immediately after China got the news about the strikes early Wednesday, with BSK futures for the currently most popular contract hitting the day’s high of RMB 6,744 per tonne in the morning.

However, anxiety over decreasing BSK availability was overtaken by concerns over persistently poor physical pulp demand in the Chinese market, leading to a drop in futures levels that afternoon.

The May contract settled at RMB 6,620 per tonne on Thursday, down RMB 144 per tonne from last week. That level is equivalent to $840 per tonne after removing 1.13% VAT and RMB 120 per tonne in logistics costs.

Last week, with more Canadian producers getting on the bandwagon for hikes of $20-30 per tonne for NBSK, prices for Canadian NBSK crept up $20 per tonne at the low end of the spread from a fortnight ago to $910-930 per tonne, which has been steady since then.

Meanwhile, Nordic NBSK prices have been steady over the past two weeks, standing at $880-900 per tonne.

The mid-point for NBSK has therefore climbed $5 per tonne to $905 per tonne.

Farther afield in South America, the forestry area in Chile that has been damaged by fires during the region’s summer season continues to increase, but Arauco and CMPC, two major Chilean radiata pine suppliers in China, have maintained their mill operations there, reported sister publication PPI Latin America.

Contacts pointed out that the forest fires have apparently not affected pulp production at the two producers’ mills in Chile, but logistics are likely to be hit, which may weigh on radiata pine pricing down the road.

But prices for radiata pine have so far stayed flat at $870-910 per tonne.

Ilim using RMB prices: Another big-volume BSK seller, the Ilim Group, has announced its pulp prices in RMB for the first time, after a change of payments for Russian products last month from US dollars to RMB due to sanctions imposed on Russia for its war on Ukraine.

Ilim has set the list price of Russian BSK at RMB 6,300 per tonne, CIF, main ports in China, and of RMB 6,020 per tonne via land transport. All the prices exclude VAT and logistics costs.

Both the seller and customers indicated that when making comparisons with other BSK imports from elsewhere in US dollars, a fixed exchange rate between the greenback and RMB of 7:1 will be applied.

That formula renders Ilim’s BSK list price as $900 per tonne, which is steady from last month, according to the Russian supplier.

The producer has priced its bleached hardwood kraft (BHK) pulp at a list level of RMB 5,130 per tonne, CIF, and at RMB 4,930 per tonne via land transport.

However, most of Ilim’s pulp products are sold to several Chinese traders with discounts of up to RMB 350 per tonne, or $50 per tonne.

In the end, Russian BSK has been reassessed at $850-900 per tonne after the pricing adjustment, compared to the $830-860 per tonne assessed a fortnight ago.

BHK pressure: Contacts believed BSK prices will be steady or edge up a bit going forward, but hardwood pricing is a different story.

BHK manufactured in China has seen a sharp decline this week.

A major seller indicated that the grade has been offered at RMB 5,800-5,850 per tonne, including VAT, which has dropped in proportion to the decline in BHK imports. The offered levels are comparable to $750 per tonne for BHK imports.

Buyers said the cuts were more in transaction deals, with the grade fetching an average of RMB 5,750 per tonne, which is equivalent to around $725 per tonne minus VAT and logistics costs.

The price of RMB 6,220 per tonne for BHK made in China that PPI Asia published this week was assessed before the drop, and will be reassessed later on.

Sources pointed out that the erosion reflects how weak fundamental demand is in the Chinese market.

A major trader lamented that the Chinese economy remains in a slump, with no sign of the expected recovery after the country’s reopening.

“People have lost their jobs and income after companies were wound up when the country was in COVID-19 lockdowns, leading to shrinking consumer spending. Under the circumstances, how could paper and board prices be driven up,” quipped a trader.

On top of that, end-users are anticipating further price falls for BHK imports due to massive new capacity coming on stream in South America.

Producers have remained sanguine, though, pointing to the recent implementation of price hikes of RMB 200 per tonne in both the tissue and uncoated fine paper segment.

But a Brazilian supplier admitted that big-volume Chinese end-users are still reluctant to pick up volumes and BHK is still under downward pressure.

South American BHK is fetching $730-760 per tonne, down $10 per tonne at the low end of the range.

Source: Fastmarkets