Based on the share price reactions of forest companies, the market was excited by Suzano’s announcement, as news is otherwise scarce, apart from cautiously positive European PMI data for the industry. The increase came somewhat earlier than consensus expectations, and it will be interesting to see if it ultimately goes through.
In a positive scenario, the increase in list prices could indeed reflect a turnaround. However, the market intelligence service I use indicated that discounts given on pulp list prices in Western countries had again (this has been a trend in recent years) spread at the turn of the year, and the increase in list prices merely “covered” that gap (i.e., kept the price stable), at least for softwood pulp. In the coming weeks, we will presumably become wiser on the matter.
To my understanding, at least Finnish forest companies have not really started using pulp futures. Fundamentally, for pulp, the buyer and price are known when the ship departs from the country of production towards China, at least in the case of our forest companies. As a result, the pulp price achieved by at least Finnish forest companies during a quarter typically follows the development of market spot prices with approximately a one-quarter lag.