The cash-settled contracts, one for softwood pulp and one for hardwood pulp, settled against the monthly averages of Fastmarkets RISI’s NBSK CIF China assessment and Fastmarkets FOEX’ PIX China BHKP Net index, made their debut on the Norwegian exchange on Tuesday June 1.
The June and July NBSK cif China contracts slipped by $5-10 per tonne on June 1 and BHKP China Net’s June, July and August contracts were down by $10 per tonne respectively on June 2, and then stayed flat.
“Markets in China seem to have calmed down going into the new month and pulp was no exception. Shanghai Futures Exchange (SHFE) pulp has managed to stabilize as of Thursday May 27 and now has the June contract trading at 6,290 yuan ($983.40) per tonne or a $872 per tonne equivalent on Norexeco’s NBSK Shanghai contract. The curve has transformed into an almost flat line, indicating a market that needs to rebalance itself after some weeks of turmoil,” Quint Feenstra, pulp derivative broker at Freight Investor Services (FIS), said.
“Meanwhile, prices in Europe remain strong and are set to increase even more in the spot market,” Feenstra said.
“We are very excited to announce that our two new China futures contracts were listed for trading on June 1, 2021, providing price transparency 36-months forward for the first time ever on Chinese import prices for both NBSK and BHKP,” Anita Skjong, director market, Norexeco said.
“These new contracts are important contributions to the rapidly growing pulp futures market and will connect the international participants, large industrial players and China - the world largest importer of pulp - in one transparent liquidity pool. This is good news for everyone exposed to fluctuation in pulp prices [because] it brings more liquidity to the market and increases opportunities to unload unwanted risks by hedging,” Skjong said.
“Our two new China contracts are index settled, meaning the futures contract at the time of expiration will settle against input on actual physical transactions reported by the pulp industry,” Skjong said.
Now that these contracts are listed on an international exchange such as Norexeco with several access routes available for the international market, including Chinese companies, the domestic China futures market and international futures market are connected, Skjong said.
“With the industry’s involvement it will increase the validity of the forward curve and strengthen the link between the physical and financial markets,” Skjong said.
Learn more about pulp prices, the global pulp market and China pulp futures in our special 22-page report: ‘The future of China pulp futures’.
What’s inside this report?
- Global pulp market trends and price drivers in 2021 by David Fortin, vice president, International Fiber, Fastmarkets Forest Products
- Understanding the SHFE and its effect on physical markets by Nick Chang, managing editor Asia, Fastmarkets Forest Products
- An introduction to Norexeco’s new China pulp futures by Anita Skjong, director market, Norexeco - The Pulp and Paper Exchange