How to look for opportunities in the crisis - the prospect of the dissolving pulp market in 2019
Source: Zhonghua Paper
Throughout 2019, the management of the dissolving pulp production plant will face enormous challenges. This challenge is how to reduce the production cost of the dissolving pulp, and at the same time effectively maintain the normal production of the plant. For the entire dissolving pulp industry, it faces the pessimistic expectation of macroeconomics, enabling the entire dissolving pulp industry to operate healthily and improving the quality of equipment, technology and products.
The main performance characteristics of the dissolving pulp industry in 2018 are:
(1) The production capacity has increased, but because the paper pulp market is better, it has not been released;
(2) The profit margin of paper pulp is large, and the profit of dissolving pulp is limited, but most domestic factories still insist on making dissolving pulp;
(3) When the price of the downstream viscose staple fiber market fell, the market price of the dissolving pulp in the trend followed the decline in the market price of viscose staple fiber;
(4) Sino-US trade frictions intensified. In August 2018, the Chinese government imposed a 5% tariff on the dissolving pulp originating in the United States, and the market price did not respond significantly;
(5) The market price of imported dissolving pulp is flat, with little fluctuation.
Through the phenomenon that the market price of dissolving pulp in 2018 and the market price of viscose staple fiber appear to be in a long-term non-synchronous trend, it is possible to gradually establish a viewpoint: in the next few years, with the expansion of viscose staple fiber capacity, the dissolving pulp The amount of use will gradually increase, as long as the capacity growth rate of the dissolving pulp is not as fast as the growth rate of viscose staple fiber, the market supply of dissolving pulp will show its firm price when the market is limited; For the price trend, there will be a phenomenon of unsynchronized rise and fall.
If the macro environment is poor, the market price of dissolving pulp can be firm for a while, but as the market price of viscose staple fiber falls, the operating rate of its industry begins to decrease, and the demand for dissolving pulp in the market shows a decrease, regardless of the supply of dissolving pulp. Whether the merchant is willing to cut the price, and finally choose the strategy of lowering the price and actively shipping in order to go to the stock.
New capacity of dissolving pulp at home and abroad from 2019 to 2020
According to public information at home and abroad, there are about 3.09 million tons of dissolving pulp in the world from 2019 to 2020. The 1.5 million tons of dissolving pulp production line in China has been rebuilt in 2018, with the addition of 700,000 tons of viscose in China. After the production capacity of staple fiber has been completed in the first half of 2019, it is expected that the production capacity of 1.5 million tons of dissolving pulp will be released. From the perspective of new capacity of dissolving pulp in foreign countries, the new capacity of dissolving pulp in 2019 is mainly concentrated in Finland, Canada and Sweden; the total capacity is 810,000 tons. Another 780,000 tons of dissolving pulp, depending on whether the market capacity is allowed. The specific capacity increase is shown in the following table.
Viscose staple fiber market capacity from 2019 to 2020
As the most important viscose staple fiber segment downstream of the dissolving pulp market, its capacity will continue to expand from 2019 to 2020. The countries with the largest capacity expansion include China, Thailand, India, Indonesia and other countries. The expansion capacity is expected to be between 900,000 and 1.2 million tons within two years.
In 2018, the China Textile Science Research Institute directly expanded its 15,000-ton production line in Xinxiang, Henan Province, to a production line of 30,000 tons, marking that China Textile Institute has fully mastered the core technology of the lyocell fiber production line. At the same time, the action of China Textile Institute also stimulated the expectations of other domestic cellulose fiber manufacturers for the production of lyocell fiber. According to relevant information, it is expected that China's lyocell fiber industry is expected to reach 1 million tons in 2022-2025; but in 2018, the production of lyocell fiber in China is only 55,000 tons.
Viscose fiber and lyocell fiber have an expansion expectation of 2.1-2.6 million tons in 2019-2025. In a sense, it can stimulate the enthusiasm of the pulp mill to produce dissolving pulp. It is expected that pulp mills will gradually dissolve the difference in the future. The pulp is researched and developed to produce a higher quality dissolving pulp, providing high quality raw materials for the downstream viscose staple fiber and the lyocell fiber industry.
Combined with the release of the capacity of the dissolving pulp and the release of the downstream cellulose fiber capacity, it can be roughly considered that the dissolving pulp market in the period of 2019-2020 will remain basically stable in terms of supply and demand, and the production capacity will continue to increase steadily.
2019 Dissolved Pulp Market Price Outlook
On April 6, 2014, China imposed anti-dumping on dissolving pulp originating in the United States, Canada, and Brazil for a period of five years. At the beginning of 2017, the Canadian government complained to the WTO, but on April 20, 2018, the investigation authority ruled that the anti-dumping measures should continue to be implemented in accordance with the announcement of the Ministry of Commerce No. 18 of 2014. On April 6, 2019, the above-mentioned anti-dumping case expired in five years. In view of the re-ruling in 2018, the market generally expects to continue the anti-dumping probability, that is, the impact of the incident on the market is relatively small.
Regarding the price trend of the dissolving pulp market in 2019, because the viscose staple fiber industry is not too optimistic about the market in the first half of 2019, the market price of dissolving pulp may continue to fall in the first half of 2019. According to the feedback of viscose staple fiber production units, the domestic dissolving pulp may fall below 7000/ton, which means that the price of imported broadleaf dissolving pulp may be between 850-880 US dollars/ton; and imported needles Dissolved pulp, in December 2018, the price of imported broadleaf dissolving pulp is only 20 US dollars / ton, so the price of imported softwood pulp may be between 860-900 US dollars / ton. This is also the first time that the author has given pessimistic expectations for the market trend of dissolving pulp for the first time in the coming year.
However, the decline in market prices does not mean that the profit of the company will decrease. If the entire macroeconomic cycle is more pessimistic as predicted by the IMF, the price of the main materials of the wood pulp, sulfuric acid, caustic soda and other dissolving pulp will also be adjusted. At that time, although the market price of the dissolving pulp showed a decline, it did not mean that the dissolving pulp production enterprise could not make a profit or the profit decreased. Throughout 2019, the management of the dissolving pulp production plant will face enormous challenges. This challenge is how to reduce the production cost of the dissolving pulp, and at the same time effectively maintain the normal production of the plant. For the entire dissolving pulp industry, it faces the pessimistic expectation of macroeconomics, enabling the entire dissolving pulp industry to operate healthily and improving the quality of equipment, technology and products.
In the past years, the author will say that the “crisis†should seize the development opportunities in danger; and for 2019, the author believes that it is necessary to do a good job in prevention and control of business risks in order to resist the uncontrollable dangers in the market, and at the same time Look for development opportunities in the situation.
Editor in charge: Ge Hongyan
Proofreading: Ge Hongyan
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