Industry Overview * China Paper Price Weakness: China paper prices continued to weaken in October, down by RMB 70-200/ton, despite seasonally stronger demand. This decline is attributed to an oversupplied market, negative macro sentiment, and disappointing seasonal demand. As a result, profitability has further weakened, now 6-50% below the 5-year average. [5] * China Pulp Restocking: China's pulp restocking is crucial to changing the pulp price direction and balancing the market. However, this is unlikely to happen in the short term, leading to continued downward price pressure. [6] * Paper Utilization: China's paper utilization rate remained low at 57%, reflecting weak profitability and an oversupplied domestic market. [10] * Paper Production: China's paper production decreased by 1% month-over-month and 6% year-over-year in October, driven by weak profitability and an oversupplied domestic market. [24] * Paper Margins: Paper margins decreased across all grades in October, with the decline ranging from 4-11% month-over-month, primarily due to lower paper prices. [26] China Market * Hardwood and Softwood Prices: Hardwood negotiations concluded at 540−550/toninOctober,withbuyersexpectedtobidlowerforNovemberdeals.Softwoodpricessawa10-20/ton increase, expected to remain stable due to capacity shutdown announcements and buyers' perception that prices are already at marginal cost. [8] * Pulp Prices: China's FOEX hardwood imported pulp prices decreased by 3/tonto556/ton, while domestic resale prices were down RMB 0-42/ton week-over-week. Softwood imported FOEX prices remained flat at 770/ton,withdomesticresalepricesrangingfromRMB−1to3/tonweek−over−week.[14]∗∗∗PulpInventories∗∗:PulpinventoriesatChineseportsremainedflatmonth−over−monthat1.7milliontonsinOctober,962.0/share, based on a DCF methodology. [61] * Metsa: Metsa's management highlighted the soft market demand for paper and pulp in China, with improving demand for paperboard but expected to soften by lower consumer purchasing power. [53]
