SINGAPORE, May 27, 2022 (PPI Asia) - Customers in China have faced increasing difficulties when trying to procure pulp imports this month, after the domestic paper and board market hit a demand and pricing slump stemming from the country’s lockdowns.

Suppliers kept bleached softwood kraft (BSK) pulp prices intact for June shipments both for offers to contract buyers and for spot offers, mainly to futures investors.

Arauco and the Ilim Group have tabled a $30/tonne increase for bleached hardwood kraft (BHK) pulp, which takes their respective list prices to $865/tonne and $830/tonne.

Suzano followed suit on Thursday May 26, and other South American producers are expected to make similar announcements shortly.

A Brazilan contact admitted that the Chinese market has been in a bizarre world where pulp is more expensive than paper and board (P&B).

Big-volume buyers, including end users and traders, lamented that low stocks and restricted availability have left them no choice but to accept high prices in order to get volumes.

BSK futures, resale dip: BSK futures for the most tradable September contract (sp 2209) slipped RMB 211/tonne over the past two weeks, settling at RMB 7,116/tonne on May 26.

That level is equivalent to $942/tonne after removing 13% value-added tax and RMB 120/tonne logistics costs.

Resale northern BSK (NBSK), which is pegged to futures, has sunk by RMB 63/tonne to RMB 7,467/tonne, equivalent to $964/tonne.

Prices for NBSK imports have remained intact, however, with Canadian and Nordic NBSK standing at $990-1,030/tonne and $980-1,030/tonne respectively, and the mid-point for the grade staying at $1,008/tonne.

Traders indicated that they would see losses if they get NBSK tonnage at current prices and sell it on to customers.

Radiata pine is steady at $980-1,010/tonne.

Ilim has resumed normal offers of chemical pulp for June after putting May offers on hold. The Russian producer set its BSK list price at $1,000/tonne.

Buyers indicated that net levels for the grade have remained unchanged at $940-980/tonne.

BHK levels up:

Resale South American BHK declined last month, with prices down to RMB 5,980/tonne in mid-April.

However, a major customer snatching up tonnage available in the domestic market drove up prices.

This week, Arauco agin pushed back the start-up of its new 1.56-million-tonne-per-year BHK mill in Chile, known as the MAPA project, from June to September; that news sent resale BHK levels climbing in China.

Resale South American BHK has fetched RMB 6,692/tonne, equivalent to $862/tonne, minus VAT and RMB 150/tonne logistics costs.

The uptick is pushing big-volume end users to accept the potential $30/tonne rise for the grade in their ongoing talks with major suppliers.

South American BHK has thus been assessed at $800-840/tonne, up $30/tonne at the top end of the spread.

Russian BHK is up $30/tonne to $780-830/tonne, though.

Buyers’ dilemma:

Sources indicated that last month, major end users were the first to confirm orders and get volumes, because they were pushing for P&B price hikes domestically.

They were initially sanguine about the market, believing the planned rises would be implemented when lockdowns in the country - most notably in Shanghai - were expected to loosen and people could go back to work this month.

The Chinese government has announced the easing of the stringent measures in Shanghai.

However, government data shows the country is now facing contraction in the economy, with unemployment rates rising, people cutting spending and companies likely out of business because many of them had no income during the past few months.

Contacts said that although prices for tissue jumbo rolls crept up, that was driven by cost increases instead of demand.

Sources reported that P&B prices have been in decline this month, and the downturn and grim projection for the Chinese economy have put buyers in a difficult position.

“If we continue to get contract pulp volume this month, we will likely face losses; but if we skip orders, we will likely lose the long-term contracts and competitors will take over. It’s very difficult for us,” a major buyer said.

From Fastmarkets RISI