Domestic prices for Brazilian graphic paper remain unchanged and import prices drop
A lower demand for graphic paper has caused an under performance when compared to late 2022
Domestic prices for graphic papers in Brazil remained stable in December 2022 and January 2023, sources told Fastmarkets during the latest market consultation, which closed on Thursday January 12.
Despite a price increase for January that had been announced by local uncoated woodfree (UWF) and coated woodfree (CWF) producers, contacts noted that domestic prices were unchanged because of lower demand compared with the last quarter of 2022.
In late 2022, domestic producers announced price increases of 7-12% that were set to take effect in January. According to sources, these adjustments were driven by higher production costs, such as more expensive pulp; tight supply, which was followed by the implementation of purchase quotas; and logistics costs affecting imported products, with freight rates reaching as high as $10,000-12,000 per tonne.
A source, however, said that the market is “unstable,” and he believes it will be difficult to implement higher prices now.
“There was a movement from national producers to raise prices. Personally, I think they missed the timing. The price increase should have been done earlier, in June or July,” another source said.
Discounts possibly on the horizon
Sources indicated that prices of imported products arriving in Brazil are dropping, and further discounts are in the horizon.
“In December, the paper market in Brazil was negatively influenced by the World Cup games and the seasonality of the month,” a different source said, noting that most Brazilian offices and schools stopped during the matches, reducing productivity.
“Today, the editorial paper market is very weak, especially newspapers and magazines,” that source continued, adding that local producers “are announcing increases so that paper prices do not drop.”
In December and January, the domestic price for CWF in reels remained at 6,500-6,800 Reais per tonne and that for CWF in sheets held at 7,100-7,800 Reais per tonne. These prices are up by 31.7% and by 34.2% year on year respectively.
In the UWF segment, a source said that demand remains strong in the country.
“Offset is still well demanded,” that source said, citing the governmental textbook program, which he expects will support strong demand in the first months of 2023.
In Brazil, the school year starts in February, so the country is in the middle of the high demand season for this grade.
Prices for domestic UWF also remained stable compared with the past couple of months.
Fastmarkets’ price survey found Brazilian offset at 5,450-5,900 Reais per tonne in December and January, while cutsize held at 5,300-5,700 Reais per tonne. These prices are up by 20.7% and by 11.1% year on year respectively.
A different pricing scenario was noted for imported products from Asia, with prices in Brazil dropping compared with November 2022 levels due to increased supply.
Freight costs in decline
Market participants stated that freight costs have been declining, supporting lower international prices. As a result, imports are more attractive for Brazilian buyers than they were a year ago, with shipments from Asia – especially from China – arriving at much lower prices compared with a year ago.
“We had a barrier from Asia regarding freight. With the reopening of Asia to the world, prices have dropped. Chinese manufacturers are aggressive, and Asian freight rates are strongly down,” a different source said.
Contacts put freight costs from Asia to Brazil at around $2,000 per tonne. Some sources mentioned even lower levels, closer to $900-1,000 per tonne.
For Brazilian customers, imported CWF in sheets traded at $1,100-1,300 per tonne in December-January. This value is 5.9% below a year ago.
Contacts stressed that lower prices have been coming mainly from Asian producers, while prices for material from Europe have been holding at higher levels.
As for imported lightweight coated (LWC), prices have fallen slightly compared with previous months to reach $1,100-1,200 per tonne, although that value is still up 15% year on year.
Prices for imported newsprint also dropped to $770-830 per tonne, up 9.2% in the annual comparison.
This article was first published in PPI Latin America, the industry’s most trusted pulp and paper market news and prices for Latin America. Join paper industry executives, buyers, industry suppliers and financial institutions around the world and keep up to date on the latest market prices and information. Speak to our team to find out more and subscribe to our newsletters.