The Pulp and Paper Products Council reported World-20 market pulp stats for October.

Key takeaway — Pulp shipments were up 2.2% y/y (hardwood +5.2%; softwood -1.0%) in October, which is the weakest y/y growth reported since April 2022. Shipments were down 10.1% m/m, with hardwood (-17.4%) and softwood (-0.3%) both trending lower; however, on a seasonally adjusted basis, shipment volumes decreased a more modest ~1.0% m/m. Commentary out of London Pulp Week earlier this month highlighted easing supply chain conditions, with improving ocean logistics and freight rates, although concerns about pulp demand are emerging with lower consumption of paper and packaging products. Final November list prices for US NBSK were down 1.4% m/m to $1,745/tonne, while SBSK was also down 1.1% m/m $1,720/tonne. We forecast average NBSK list prices for Q422 of $1,750/tonne (i.e., our forecast implies a further ~$10/tonne drop in December).

Softwood pulp shipments decreased 1.0% y/y in October — Softwood shipments were down y/y in most regions, with lower shipments to North America (-3.8%), Western Europe (-0.7%), Eastern Europe (-12.9%), China (-2.6%), and Oceania (-24.7%), partially offset by increased shipments to Latin America (+0.3%), Japan (+5.3%), and Other Asia/Africa (+8.0%). By grade, SBSK shipments increased by 4.3% y/y, while NBSK and Radiata shipments decreased 0.7% and 15.0 % y/y, respectively. The softwood operating rate was unchanged y/y at 86%, with NBSK at 83%, SBSK at 95%, and Radiata at 83%.

Hardwood pulp shipments were up 5.2% y/y in October — Hardwood shipments increased y/y in most regions, with higher shipments to Western Europe (+2.8%), Latin America (+5.7%), China (+16.8%), Oceania (+4.0%), and Other Asia/Africa (+2.1%), partially offset by decreased shipments to North America (-7.7%), Eastern Europe (-12.8%), and Japan (-2.5%). By grade, the PPPC estimated that Eucalyptus shipments advanced 6.8% y/y, while SBHK shipments rose 11.0% y/y and NBHK shipments fell 7.1% y/y. The hardwood operating rate was up 4 percentage points y/y to 85%, with BEK at 87%, NBHK at 76%, and SBHK at 85%.

Inventories: days of supply relatively unchanged in October — According to the PPPC, global days of softwood supply (seasonally adjusted) in October were up 1 day m/m at 43 days, while hardwood supply was unchanged m/m at 43 days (seasonally adjusted). Producer inventories were down 4.0% m/m in September, with softwood inventories decreasing slightly but remaining above “balanced” levels. In China, port inventories decreased in October (-3.0% m/m), and have decreased by 13.8% since the end of June.