First of all, Mr. Christian Chavassieu briefly introduced the World Dissolving Wood Pulp in 2020 from the aspects of capacity, usage, capacity, utilization rate and import price.
Then he analyzed the global supply and demand of dissolving pulp. In supply side, Dwp capacity expansion continues to grow rapidly. China domestic supply of DWP & CLP rayon grades reduced drastically. 4 DWP Co’s can significantly supply the specialty cellulose markets. Others are mostly supplying DWP to the textile industry. Note the significant supply increase of Indonesia (RGE), Laos (Sun Paper) and start up of Chile (Arauco). China Cotton Linters Pulp domestic usage continued to decline in China in 2020 while USA, China and Spain export remained stable over 2019.
In demand side, Global Demand for DWP is down in 2020. Tyrecord and auto filter markets are hit most while Ether markets held up. Global DWP demand growth slowed down, but rayon grades DWP demand remains the key driver for the cellulose industry. World Specialty DWP demand reduced sharply, but the continuous growth of production capacity led to serious imbalance between supply and demand of Dwp in 2020.
In terms of price, at current differential between DWP and paper pulp prices, there is not a real incentive for DWP pulp swing mills to return to paper pulp production. The margin between VSF and DWP prices is currently down to the last 5 years average.