Suzano Sees Price Recovery for Its Market Pulp as Demand Pressures Supply
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Bloomberg reports that Suzano SA, the world's biggest wood pulp maker, expects a sharp recovery in prices to benefit earnings and speed up de-leveraging this quarter.
Global supplies of the material used to make paper cups, tissue and cardboard are tightening as Chinese demand recovers and after high-cost producers cut output in reaction to a pandemic-fueled price slump. That's good news for low-cost companies like Sao Paulo-based Suzano, which has started to ratchet up prices.
"Fundamentals are proving to be more favorable than previously thought," Carlos Anibal de Almeida Jr., Suzano's commercial director for pulp, said in an interview. "Clients have understood current fundamentals justify the price adjustment."
The company has raised its prices in consecutive months. The most recent hike was for China, where Suzano will charge $580 a metric ton for hardwood pulp starting in February. Prices, which tumbled from $770 in mid-2018 to as low as $440 in August, may get back to $640 next quarter in Asia, Almeida said, citing analysts' projections.
Prices have also risen in Europe, which was the region most affected by last year's demand drop. For January, Suzano lifted European prices to $750 from 2020's average of $680. While the company is still considering whether to apply another price increase for Europe, Almeida said consultants are predicting they will get to $850 this year.
A weaker dollar is cushioning the blow of higher prices for customers in both regions.
