Today, pulp futures prices surged significantly, with the main 2601 contract closing at 5,458 yuan per ton, up 3.53%. Trading volume for the 2601 contract reached 343,200 lots, with open interest increasing by 77,400 lots compared to the previous session, while total holdings decreased by 3,165 lots to 96,500 lots.
On the supply side, recent news has highlighted overseas pulp mill shutdowns for maintenance. Domtar officially announced the permanent closure of its Crofton mill in British Columbia (BC), Canada, on December 2. The Crofton mill produced 380,000 tons of Lion brand bleached softwood pulp annually. Meanwhile, Metsä Group also announced on December 2 that its Rauma mill, with 650,000 tons of softwood pulp capacity, would temporarily halt production starting December 15, with operations expected to gradually resume by January 7 next year. Additionally, the CEO of Metsä Fibre stated that due to anticipated softwood pulp market instability in early 2025, the company is preparing for significant production cuts at its Joutseno mill in 2026.
On the demand side, the latest data shows a notable month-on-month decline in wood pulp inventories at European ports in October, with a slight year-on-year decrease, indicating some improvement in demand. Domestically, despite substantial new finished paper capacity coming online this year, effective end-user demand remains weak, leaving the paper market oversupplied. Paper mills are operating at low utilization rates, with no significant increase in overall finished paper output. Persistent overcapacity in the paper sector continues to squeeze industry profits. Downstream paper mills remain cautious in raw material procurement, keeping domestic pulp port inventories at historically high levels.
In summary, while pulp futures prices have rallied strongly over the past two trading sessions due to short-covering and overseas supply disruptions, the lack of substantial improvement in supply-demand fundamentals may limit further upside. Additionally, market participants should monitor potential volatility from remaining short positions in pulp futures.
Risk warnings: Macroeconomic and policy risks, unexpected overseas price movements, and currency risks.