In most cases, pulp is integratedly consumed by paper producers. However, pulp is traded in market globally with approx. 70 million tons in 2020. Market pulp is a globally trading commodity and there are many factors to form its price. Among those factors, the balance of the market pulp demand & supply is one of the most important factors.
Looking at supply side, the production capacity gets increased every year and it is expected to be increased further. Especially the growth in South America is significant. Although South America has already become the biggest supply area, there are lots of additional expansion plans there. South America would keep leading supply side. For supply growth by grade, BSKP has some expansion plan, however, majority of the expansion is for BHKP because it has cost competitiveness in raw wood materials with fast growth.
Looking at demand side, the biggest demand area is China. Since 3% demand growth is expected in China through 2020 to 2025, it is necessary to keep monitoring the situation of China. Also, in Asia except for China, Japan and Korea, market pulp demand is expected to increase. On the other hand, in the matured markets, such as North America, West Europe and Japan, the demand is expected to be stable or decreased.
Both supply and demand are expected to be increased. Although demand is gradually increased, supply tends to jump up when the expansion projects start. The demand & supply balance on BSKP is expected to be tightened because of the limited expansion plan. However, that of BHKP is expected to be softened because of the lots of expansion plan. That balance is important when we consider the market pulp price trend.
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