Pulp Manufacturers Saw Better Profitability in 2017

pulp manufacturer

The global economy was good to the pulp industry in 2017, according to numbers released last month.

Pulp manufacturers saw prices increase for wood fiber, moving to $89.08/odmt on the Global Softwood Fiber Price Index in the last quarter of 2017 – four percent higher than a year prior (and the third consecutive quarter of gains).                 

The increase was felt the most in Western North America in addition to Europe, Russia, and Australia.

Meanwhile, hardwood prices also went up. The Global Hardwood Fiber Price Index hit the highest point in the past three years in the last quarter of 2017, although these gains weren’t realized everywhere. Prices in the U.S. South actually dropped by 2.3 percent from 4Q 2016.

Pulp manufacturers are benefitting because while wood fiber is the single biggest cost in making wood pulp, the cost percentage for fiber has gone down. As of 4Q 2017, wood fiber cost percentage was 23.2 percent, an all-time low, down from 36 percent back in 2012.

The end result is that the low wood cost share has led to better profitability for pulp manufacturers.

Looking Forward for the Pulp Industry

2017 was widely viewed as a volatile year for the pulp industry across the globe. Most industry experts predict, though, that stability, not volatility, will be the name of the game in 2018 and into 2019.

From a global perspective, the biggest challenge to domestic pulp producers will come from East Asia, specifically leading pulp producers like China, Japan, and Indonesia. China alone will add approximately two million tons of pulp production by the end of 2018, with demand to meet it – resulting in higher prices for pulp.

Experts predict that volume will increase through 2018, even though prices for that region may remain stable.

Maintaining Peak Performance

No matter what happens in the pulp industry in 2018 and the future, each pulp & paper mill has to keep itself operating at max capacity in order to take advantage of positive trends and guard against negative ones.

That means regular, consistent, and proactive maintenance needs to be a priority. Southern Field works with the pulp & paper industry to maintain crucial equipment and keep it in peak condition so efficiency remains high.

Contact the Southern Field team for more information on mill maintenance and keeping your equipment running properly.