N E W S & V I E W S • S E P T E M B E R 2 0 2 3 15 Paper prices in all the major regions namely China, the USA and Europe are just not gaining ground and paper suppliers are struggling to turn around market sentiment to push increases onto consumers. Until there is some tangible improvement in paper pricing, the pulp market is likely to languish at the lower end. This is being compounded by new pulp supply capacity coming online in both China and South America. Manufacturers of both pulp and paper need to consider the supply demand equation and take commercial downtime to ease the surplus volumes in the markets. As is inevitable, the collateral damage spills over to wood chip markets, and many wood chip suppliers have been having a torrid time. The Chinese buyers are always aggressive in their approach and are quick to renegotiate terms when they are under pressure. They have been pushing all their suppliers to reduce vessels and prices. Whilst NCT has had to accept delays of up to three months in the vessel schedules with our Chinese customers, we have not retreated on pricing. I have been in contact with many of our competitors in other countries and we note anecdotally that Chilean and Australians suppliers have been pressured into price decreases of between 4% and 8% and significant reductions in shipments. Even Vietnam has not escaped unscathed, with prices significantly below their peaks of $200 per tonne late last year, trading at around $140 right now. Inevitably, having a three-month delay in all gum vessels to China will spill over into the monthly member’s intake into Richards Bay, and we have had to make a call to constrain intake to 75% of our budgeted volumes for the foreseeable future. Under the circumstances we honestly believe we have done all we can to minimise the impact on our gum members. Further to that, we are actively pursuing new opportunities for gum, with new customers in Asia, and are hopeful to mitigate this situation further with unplanned gum sales into Asia. Possible European markets are unlikely, as they face similar challenges to China, and customers we have traded within Europe have no desire for importing wood chips – a situation we expect for at least the next 18 months. However, if we can secure additional business, we will of course be able to review our intake of gum in due course. It’s all about China at the moment, and we watch weekly for indications of change. Although the major economies are not performing well and this is impacting our markets, we do still hold the longer-term views remain that there is still a worldwide shortage of fibre and we should see that come to the fore once again after this dip in the pricing cycles. Chinese Wood Chip Import Volumes (kt) vs Pricing (in RMB/t)
RkJQdWJsaXNoZXIy MjgyNjA0