Recently, a research report said that the second half of this year will open the prelude to the oversupply of global wood pulp supply for two and a half years. In the context of oversupply, there is a clear potential downside for wood pulp prices. Based on global pulping cash cost estimates, the potential down space is 17% for softwood pulp and 35% for hardwood pulp.

In the next two and a half years, there will be overcapacity in wood pulp, and there are two reasons for the price drop.

First, the Global Pulp and Paper Products Council recently announced that the global pulp mill stocks in July rose from 34 days in June to 38 days. Significantly surpassing the average 32-day average since 2002, the price of falling plasma prices has increased rapidly. The inventory in the same period last year was 39 days, and the global pulp price has since entered a wave of price declines.

Second, in the next two and a half years, there will be 10.31 million tons of new capacity in the world, and the demand will not exceed 5 million tons. The oversupply is expected to be clear.

In the near term, Russia's Ilim (Ilim) holding company's 720,000 tons of softwood pulp production line and Brazil's Eldorado (Golden Bull) company's 1.5 million tons of eucalyptus pulp production line, a total of 2.458 million tons of capacity will be put into production in the second half.

Therefore, the future bargaining power will be strong, and the downstream enterprises of wood pulp with good sales channels will benefit.

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