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This article is an extract from a special report, “The future of China pulp futures”. Get your copy of the 22-page report here.
What role did futures trading play in the 2021 price rally? The China pulp market experienced one of its fastest and steepest rallies ever in the first few months of 2021, surpassing even that seen in the second half of 2017. This has had a knock-on effect on pulp prices around the globe, with Europe and the US also seeing unprecedented price hikes.
Both supply-side and demand-side fundamentals were strong going into 2021, but soaring futures prices on the Shanghai Futures Exchange drove prices up further and faster than expected. They created additional buying interest from traders, who could afford to pay higher prices in the local import and resale markets as they could sell on the exchange and still make a sizable profit.
High price volatility makes planning difficult High price volatility creates a challenge for companies when it comes to managing their margins and costs. This is true for both buyers and sellers of pulp.
Pulp futures are here to stay The incredible success of the SHFE softwood pulp contract has proven the use case for futures in the pulp market. Moving forward, this contract and new offshore contracts focused on industrial players will become an increasingly important part of the global market pulp landscape.
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?
Get your copy here