Pulp futures help domestic companies compete for pricing power

Although China is a producer and consumer of paper products, the dependence on the import of bleached needle pulp in the domestic market is close to 100%, and the pricing power of pulp is basically in the hands of upstream foreign suppliers. However, the upcoming pulp futures will help domestic companies compete for pulp pricing power.

Pulp is a fibrous material obtained by using various methods of processing, using plant fibers as raw materials. According to the different pulp varieties of the raw materials, it can be divided into wood pulp, non-wood pulp and waste paper pulp. Among them, wood pulp is mostly used for the production of cultural paper, and waste paper pulp is mostly used for the production of packaging paper. However, in general, downstream paper products will be mixed with various pulps as needed during the production process.

According to the processing technology, wood pulp can be divided into chemical pulp, mechanical pulp and chemical pulp. Chemical pulp is the best quality wood pulp variety in the market. Bleached pulp, non-bleached pulp and natural color paste belong to the category of chemical pulp. At present, the main varieties of wood pulp produced and traded internationally are bleached sulphate softwood pulp (also known as softwood pulp, referred to as "bleaching needle pulp") and bleached sulphate hardwood pulp (also known as hardwood pulp, referred to as "abbreviation" Bleaching pulp"), the two are mainly used in the manufacture of high-grade printing paper, copy paper, offset paper, cover paper, writing paper and paper bag paper. Among them, bleached sulphate softwood pulp is the standard of pulp futures.

Limited by the limited forest resources, China's pulp production capacity growth can not keep up with the expansion of demand, the overall external dependence is higher. In terms of sizing, due to the lack of trees suitable for the production of softwood pulp in China, the domestic softwood pulp production capacity is seriously insufficient, mainly based on broad-leaved pulp, which leads to higher dependence of wood pulp. In 2017, the dependence of wood pulp on foreign countries reached 67%. The futures standard bleached softwood pulp import dependence is closer to 100%. In addition, waste paper pulp imports are also highly dependent, reaching 33% in 2017. This is mainly because China's waste paper recycling system is still not perfect, and there is still a gap compared with developed countries such as Europe and the United States. Rather than wood pulp, production has declined in recent years due to relatively heavy pollution in the production process.

Because the tree species producing the softwood pulp are mainly grown in the cold regions at high latitudes, the tree species producing the broadleaf pulp are mainly grown in the tropical regions with sufficient sunshine. As a result, global softwood pulp production capacity is mainly concentrated in North America and Northern Europe, while broadleaf pulp production capacity is mainly concentrated in Brazil and Southeast Asia. This also led to the import of softwood pulp from China, Chile, Finland and Canada. Imported broadleaf pulp is dominated by Brazil, Indonesia, Uruguay and Chile.

In addition, paper products downstream of pulp are widely used, covering almost every aspect of economic life. Therefore, from the long-term perspective, the growth rate of pulp consumption is basically consistent with the trend of GDP growth.

Responsible editor: Miao

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