Bleached Softwood Prices Explained

Bleached softwood prices are expected to increase as excess inventory in the previous year has been cleared due to Chinese increased shipments as the country’s domestic consumption picked up and buyers are actively restocking while the commodity’s price is affordable.

On the supply side, the market is shaped by delayed shipping and increased freight rates due to rebel attacks in the Red Sea. As a result, container ships rerouted to southern Africa. Thus, challenging the global market output.

Why are bleached softwood prices fluctuating?

1. Supply-Side Challenges

The record prices of bleached softwood are mostly supply-side driven. Factors such as unexpected downtime, supply chain constraints, and project delays resulted in a supply crunch. For instance, unexpected downtime began to reaccelerate in the fourth quarter of 2023 which conflicted with the most recent run-up in pulp prices.

Furthermore, the largest impact was due to a labor strike in Finland, and transportation constraints limited supply from North American mills, reducing over 1.5 million tons of market pulp in the supply chain. Thus, these combined factors squeeze its output and contribute to the fluctuation of bleached softwood prices.

2. Industry Usage

The emerging demand from various industries also drives bleached softwood prices. Tissue paper is the largest application segment in the global northern bleached softwood kraft (NBSK) market, accounting for 40% of the total demand. These tissue papers are important in manufacturing baby diapers and feminine hygiene products.

Additionally, the growing population across developing countries such as India and China will add to the increasing need for these products.

3. Demand from the Packaging Industry

Bleached softwood is a key ingredient in many types of packaging such as paperboard, tissue, and corrugated board. The growth of e-commerce industries opens another market for paper and pulp. Thus, this led to the rising demand for these packaging materials which fuels the price of bleached softwood.

4. Demand-side Risks

While the numbers speak positively, there are still concerns about the longevity of the pulp market’s bull run. China (the world’s largest consumer of market pulp) still shows an economic slowdown after the fall of its property development projects and the country’s economic deflation.

These pressing factors made China lower its purchasing power, especially in the importing sector to follow their new conservative economic plan. Thus, this will eventually affect bleached softwood prices in the future.

Which variables impact the price of bleached softwood?

• Supply-Side Challenges
• Industry Usage
• Demand from the Packaging Industry
• Demand-Side Risks
• Production Costs
• Environmental Regulations

Where does bleached softwood come from?

Bleached softwood is a type of wood pulp that has been bleached to remove lignin and other impurities. This process makes the pulp brighter and whiter, making it suitable for a variety of paper and tissue products. These are the steps in processing bleached softwood:

1. Debarking and Chipping –  The first step is to remove the bark from the logs and chip them into small pieces. This technique makes the wood easier to cook and process.

2. Cooking – The wood chips are cooked in a digester with a solution of sodium hydroxide and sodium sulfide. This process dissolves the lignin that binds the wood fibers together.

3. Washing – After cooking, the pulp is washed to remove the spent cooking chemicals and dissolved organics.

4. Bleaching – The pulp is bleached to remove any remaining lignin and impurities. The bleaching process typically uses a combination of chlorine dioxide, oxygen, and ozone.

5. Drying – The bleached pulp is dried to a final moisture content of 10%.

What are the uses of bleached softwood?

Bleached softwood is a versatile raw material used to produce a wide variety of products. The products made of bleached softwood are essential for everyday life and play an important role in the global economy.

1. Printing and Writing Paper – Bleached softwood is important in making printing and writing paper grades. This includes coated paper, uncoated paper, and fine paper. Additionally, printing and writing paper finds its application in books, magazines, newspapers, and office documents.

2. Tissue Paper – Tissue paper is used for personal hygiene and household products, including facial tissues, toilet paper, and paper towels.

3. Paperboard – It is a thick, heavy-duty type of paper used for packaging and other applications. Bleached softwood is a key ingredient in manufacturing paperboard grades, cartonboard, boxboard, and corrugated board.

4. Specialty Papers – Specialty papers are designed for specific applications such as cigarette paper, tea bag paper, and filter paper.

5. Diapers – Diapers are absorbent garments worn by babies and toddlers to collect bodily waste. Bleached softwood is a good absorbent core for diapers.

6. Feminine Hygiene Products – Feminine hygiene products like sanitary pads and tampons incorporate bleached softwood for absorbent properties.

7. Coffee Filters – Coffee filters that are used to remove coffee grounds from brewed coffee use bleached softwood as their primary raw material.

What is the future price of bleached softwood?

The growing trend of sustainability is set to open market opportunities for the bleached softwood market as green innovation of specialty papers and e-commerce platform expansion will largely contribute to its sales growth. Additionally, labor strikes in Finland and a gas explosion in Metsä Group’s Kemi bioproduct mill will significantly affect the global output as the country shares an estimated 1.5 million tons of annual softwood and hardwood pulp production.

Bleached softwood price per ton in 2030 is estimated to be around $1,000 to $1,200 per ton. This is based on the market analyst’s predictions that its global market is expected to reach $32 billion to $33.5 billion by 2030. Here are the price movers of bleached softwood in 2030:

Global economic growth – A strong global economy powered by small and medium enterprises and e-commerce will lead to increased demand for bleached softwood, driving its prices.

Cost of production – The cost of producing bleached softwood is affected by factors such as the cost of wood chips, energy, and chemicals. If any of these costs increase, the price of bleached softwood will likely soar.

Overall, the rising price of bleached softwood will have a knock-on effect on the costs of products that use bleached softwood, such as packaging materials, tissue products, and paper.