Pulp & Paper Bear Cycle Takes a Pause

Equity Research 21 August 2026 | 10:01AM BRT

Pulp & Paper: Bear Cycle Takes a Pause

Chinese buyers have stepped up hardwood procurement in the last two weeks, Marcio Farid | supporting re-sale prices recover (+$4-11/t from recent lows) and price stability for Goldman Sachs do Brasil CTVM S.A. imported volumes at $550-560/t. Henrique Marques | We think this is explained by the fact that China buying in 1H was very weak (down Goldman Sachs do Brasil CTVM S.A. 630kt y/y), a period which also coincided with limited availability due to downtime Emerson Vieira and as Ex China markets were stronger. So as the summer weak period comes to an | end and as prices are ~$50/t lower vs earlier in the year, buyers are replenishing their Goldman Sachs do Brasil CTVM S.A. inventories to produce paper until the peak season in early 4Q.

We think, however, this movement is limited. Our experience and conversations suggest China buyers tend to look at the last 12 months and the next 12 months to make procurement decision. And 12 months ago prices were below $500/t (perceived floor is below $500/t) and for the next 12 months we don’t see buyers concerned about lack of volumes (link for more details).

So we think this restocking trend will be limited, but could support price stability or even some increase going into 4Q. But as China ramps up 3 new mills this year, as pulp sellers have materially more volumes to be sold (due to end of downtime season) and with the proximity of APPs Oki mill in Indonesia, we see this bear cycle only taking a pause rather than a new trend. Additionally, wood prices have marginally declined in China this week, while paper prices are down to flat at historical low levels – a trend that needed to shift to provide support to pulp prices.

The key upside is related to potential ongoing wood price hikes in support of prices at a higher level. But we also note that the recent wood price increase is seasonal and mainly explained by the rainy season in Southern China (Indonesia buying could tighten the imported market but plenty of competitive wood is available domestically).

China FOEX hardwood imported pulp prices were slightly up to $565/t (+$2/t w/w), while domestic resale prices were flat to up by RMB 80/t to the equivalent of $545-560/t. On the softwood side, imported FOEX prices declined by $4/t to $635/t, but domestic resale prices were flat to up by RMB 40/t to the equivalent of $591-633/t.

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Exhibit 1: Hardwood domestic resale prices vs. Hardwood Exhibit 2: Softwood domestic resale prices vs. Softwood PIX China price (in USD) PIX China price (in USD)

Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 Jun-23 Aug-23 Oct-23 Dec-23 Feb-24 Apr-24 Jun-24 Aug-24 Oct-24 Dec-24 Feb-25 Apr-25 Jun-25 Aug-25 Oct-25 Dec-25 Feb-26 Apr-26 Jun-26 Aug-26 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 Jun-23 Aug-23 Oct-23 Dec-23 Feb-24 Apr-24 Jun-24 Aug-24 Oct-24 Dec-24 Feb-25 Apr-25 Jun-25 Aug-25 Oct-25 Dec-25 Feb-26 Apr-26 Jun-26 Aug-26 Hardwood domestic resale price Hardwood PIX China price Softwood domestic resale price Softwood PIX China price

Source: RISI, Goldman Sachs Global Investment Research Source: RISI, Goldman Sachs Global Investment Research