SBHK Price Reaches $740 per Ton, Up 5.7%
Six Consecutive Months of Increases Since Last August
South American Producers Adjust Supply Volumes
Surging Demand in the Chinese Market Drives Prices Higher
Concerns Over Price Hikes f
Pulp prices, which had remained stable for some time, have surged again since the second half of last year. This is attributed to South American pulp manufacturers, who are responsible for global pulp supply, starting to adjust their supply volumes since last year, combined with a sharp spike in demand during the New Year and back-to-school season this year.
Thick stacks of white cardboard mother sheets are piled up in the automated warehouse of Hansol Paper's Daejeon Plant. Photo by The Asia Business Daily DB
According to the Ministry of Trade, Industry and Energy's raw material price information trends on March 3, the average price of Southern Bleached Hardwood Kraft (SBHK) pulp, the global benchmark for pulp prices, reached USD 740 per ton in February this year, up 5.71% from the previous month (USD 700). After hitting a two-year low of USD 630 per ton in August last year, prices have risen for six consecutive months.
In May 2021, the price of SBHK soared to an all-time high of USD 925 per ton due to prolonged disruptions in maritime supply chains caused by the Russia-Ukraine war, along with a rebound in paper demand following COVID-19. Prices then stabilized at around USD 700 per ton as logistics and demand normalized. However, starting last year, major South American pulp producers such as Suzano and Bracell reduced supply to maintain market balance, resulting in a gradual upward trend. At the beginning of this year, a surge in demand from the Chinese market during the New Year and back-to-school season led to a sharp increase in prices.
An industry insider explained, "Recently, supply instability has intensified, as global woodchip (pulp raw material) supplier Indonesia Forest had its license revoked due to illegal logging issues." He added, "As a result, pulp prices are likely to continue a gradual upward trend through the first half of this year."
As pulp prices soar, domestic paper manufacturers are facing mounting pressure to raise prices. Paper is considered a product highly sensitive to cost fluctuations, as raw material costs account for about 60% of manufacturing expenses. In Korea, approximately 85% of all pulp used is imported, making the industry particularly vulnerable to fluctuations in exchange rates, oil prices, and global supply volumes.
Additionally, the sharp changes in the Middle East situation triggered by US and Israeli airstrikes against Iran have impacted exchange rates and oil prices, further contributing to upward price pressure. According to the Korea International Trade Association, Korea imports 70.7% of its crude oil and 20.4% of its liquefied natural gas (LNG) from the Middle East. If the Strait of Hormuz is blocked and alternative shipping routes must be used, maritime freight costs could increase by as much as 50% to 80% compared to current levels. Last month, Hansol Paper, the leading domestic company, raised prices for white cardboard by reducing the discount rate by 10%, citing higher energy costs. During the same period, Klean Nara also increased white cardboard prices by 10% in a similar manner.
An industry insider said, "Domestic paper companies may raise prices, especially for printing paper, tissue, and white cardboard, which have a high pulp content. However, with domestic paper demand continuing to decline and the current government's strong policy of curbing price hikes, companies may find it difficult to decide on price increases. There will likely be much deliberation over whether to raise prices."
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