PAPER & PULP MARKET OVERVIEW LATE Q2 - EARLY Q3 2021 & PRICE TREND FORECAST FOR THE COMING PERIOD
1. PAPER MARKET OVERVIEW LATE Q2 - EARLY Q3 2021.
1.1. VIRGIN PULP SITUATION (USED FOR PRODUCING FO, COUCHE, IVORY, BRISTOL PAPER, ETC.). (dùng sản xuất giấy Fo, Couche, Ivory, Bristol,…).
Faced with the low season, reduced demand, and the significant impacts caused by the Covid pandemic, virgin pulp prices, after peaking in May 2021, stabilized and gradually decreased from June 2021 and continued to decrease in July 2021.
Table of virgin pulp prices in major Asian markets:
(South Korea, Japan, Taiwan, Southeast Asia). Source: RISI.
Specifically, the average price of Bleached Hardwood Kraft Pulp (BHKP) – the raw material for producing printing, writing, and tissue paper – was USD 765/ton in June 2021, which decreased to USD 640-680/MT in the Chinese market and USD 670-715/MT in the East Asian region in July 2021.
1.2. Sea Freight Rate Trends from Global Regions to Vietnam from May to July 2021..
Statistical table of sea container freight rates of shipping lines Evergreen, SITC, Oneline, CMA-CGM, Hapag-Lloyd, Wanhai, Cosco, Zim, OOCL, and Yangming from Europe, Japan, South Korea, Indonesia, Thailand, India, and China to Vietnam. The following chart shows that freight rates from May tended to stabilize and then slightly decrease, with a slight increase on some routes in July (major markets such as Japan, South Korea, and Indonesia saw a slight increase of 6-11%).
Source: CP Paper collected from the aforementioned shipping lines..
1.3. COVID-19 Pandemic Developments in Vietnam..
According to a survey conducted by Saigon Newport Corporation (SNP) in August, approximately 79.5% of businesses were affected by the complex COVID-19 epidemic situation in Vietnam.
This includes 13% of businesses that had to completely cease production, and 66.5% of businesses that had to reduce capacity (or were forced to stop production but were still allowed to deliver and receive goods) had to ensure other strict requirements to maintain operations, such as the "3 on-site" rule, the "one route, two destinations" policy, and many other incurred costs.
As a result, the demand for production materials suddenly decreased as businesses had to reduce the number of employees or temporarily suspend operations.
1.4. SITUATION OF VARIOUS PAPER PRICES..
The following chart shows that paper prices peaked in the second quarter of 2021:
Source: RISI.
However, starting from May 2021, prices began to show a sharp downward trend, especially in the Chinese domestic market:
Nguồn: RISI
Similarly, most types of printing, writing, and packaging paper from Indonesia, Thailand... to Vietnam have shown a sharp downward trend from June to July and have stabilized or slightly decreased in August.
2. UPCOMING PRICE TREND FORECAST
According to Vol. 24 - No.30 PPI Asia by RISI on August 13, 2021, we observe that the prices of hardwood and softwood pulp have plateaued and are not decreasing much further.
In addition, it is expected that shipping rates from regions in Europe, Japan, South Korea, China, Indonesia, and Thailand will stabilize from now until October and are projected to increase by about 10-20% by the end of the year (according to information shared by shipping lines such as Evergreen, OOCL, Yangming, CMA-CGM, and SPITC). This is based on the continued shortage of containers, port congestion, and the forecast that the epidemic situation will be controlled by the end of the third quarter. Consequently, the market will gradually recover, demand will increase, and trade transportation will rise towards the end of the year.
Therefore, many predictions suggest that prices will bottom out this month or next month and are expected to gradually increase in late September and early October as markets recover from the epidemic and prepare for the year-end peak season.
