4Q/16 Global HW Pulp Market Review: sharp recovery in demand supported price hikes for China and Europe
(Sao Paulo, Brazil, January 31, 2017) The fourth quarter of 2016 was marked by a recovery in demand, especially in Asia. Fibria’s sales volume improved year-on-year. Sales reached 1.584 million t in the quarter. Hardwood pulp saw a growth of 1.270 million t in global demand for BEKP (2016 vs. 2015).
Pulp Sales (2016 vs. 2015)
Source: PPPC W20 –December/2016
This growth, combined with the scenario of depreciated prices and more balanced than expected short-term prospects for new capacity, has allowed the Company to announce three price increases for China and one for Europe and North America. It is also worth noting the overall physical progress of the Horizonte 2 Project during the quarter, which reached 77% in December, ahead of expectations.
Pulp production totaled 1,219 thousand t. in the 4Q16, 7% and 6% down, respectively, on the 3Q16 and 4Q15, mainly due to the higher impact of the scheduled maintenance downtimes in the 4Q16 (higher number of plants stopping in the quarter and interconnections with the future H2 production). In 2016, pulp production was 3% lower than in 2015, due to the retrofit of the recovery boiler at the Aracruz C mill and the slower stabilization curve following the stoppage, which was in line with the adaptation of the boiler cycle to 15 months — this learning curve was completed in 2016. Sales volume totaled 1,584 thousand t. in the 4Q16, 10% up on the 3Q16, thanks to the strong recovery in demand this quarter in Asia. In the year-on-year comparison, the 21% increase was chiefly due to the effect of the Klabin agreement and increased demand. Sales volume resulting from the agreement with Klabin totaled 183 thousand t. (3Q16: 164 thousand t). Pulp inventories closed the quarter at 47 days.
The Pulp Market
Fibria sold 1,584 thousand t of pulp in the 4Q16. It is the highest quarterly sales volume in Fibria’s history and denotes its leadership position in the pulp market. The volume was fueled by the strong recovery in demand in China in the quarter, allowing the implementation, in October, of a price increase of US$ 20/t in the region, followed by another increase in Asia of US$ 20/t, valid from December.
According to data in the World 20 Report of the PPPC, hardwood pulp sales in 2016 were 4.2% higher than in the previous year. This increase was fully driven by the 6.8% period upturn in the sale of eucalyptus pulp, the only type of hardwood pulp to show any growth.
Hardwood producers’ inventories were at 37 days, according to PPPC.
BHKP and BEKP Shipments – 2016 vs. 2015
(change % and ‘000 ton)
(Source: PPC World 20)
The year 2017 begins with a new increase announced for January, this time in all regions. With demand for Eucalyptus pulp very strong in Asia and low inventory levels, another price increase of US$ 30/t has already been announced for February, in all regions.
The full version of Fibria’s fourth quarter 2016 results, along with tables, is available on the following link: www.fibria.com.br (Source: Fibria 4Q/16 Financial Report)
Cover Image: Fibria’s bleached eucalyptus pulp production process (courtesy Fibria / representational image)