Pulp Prices Rise in January, but the Market Remains Cautious

The increase in eucalyptus pulp prices across all regions, recorded in January, strengthened the global commodity market . The price increase was driven by supply-side disruptions, which pushed prices upwards in different markets. Despite the more favorable scenario, analysts still view the sector cautiously regarding the sustainability of this trend.

In China, the price of eucalyptus pulp rose from US$560-570 per ton (t) in December to US$580-590 in January. A further adjustment of approximately US$10/t has already been announced for February, maintaining the upward trend observed in previous months. The implementation of the increase is scheduled for March.

Alongside rising prices, XP Investimentos points out that environmental restrictions in Indonesia have generated concerns regarding the availability of wood for major producers. According to Fastmarkets RISI, the change in environmental policy affects approximately 1 million hectares of plantations, which could result in an annualized loss of approximately 8 million tons of wood biomass. This volume is equivalent to a reduction of about 4 million tons in the supply of pulp. Climatic events in Europe and environmental challenges in South America, such as the fires in Chile, have also been causing similar impacts on production.

According to Bradesco BBI, the combination of these factors with strong demand in China tends to further boost prices in the short term. Even so, the market remains cautious. According to XP's assessment, without further rationalization of supply or a more significant restriction on the global availability of wood, maintaining a sustained price increase is considered challenging.

Estimates from the institution indicate that Chinese producers operate with marginal costs of around US$490 per ton, while those who rely on imported wood spend approximately US$550 per ton.