Gearbulk IntegratedReport 2024 Paperturn - Flipbook - Page 45
INTEGRATED REPORT 2024
Southeast Asia could lead to long-term changes in container
PULP
trade 昀氀ows. Meanwhile, the introduction of FuelEU Maritime
The global pulp market has faced price volatility due to
regulations in 2025 will increase compliance costs for carriers,
supply constraints, trade policies, and shifting demand
potentially impacting freight rates. If Red Sea tensions ease,
trends. Prices have increased across key regions, particu-
the return of vessels to Suez routes could trigger further rate
larly in Europe and North America, while China has seen
declines, adding to market instability.
some price resistance due to high inventories. However, the
Additionally, the proposed $1.5 million USTR docking fee for
Chinese-built vessels calling at US ports could lead to signi昀椀cant
sustainability of these gains remains uncertain amid macroeconomic concerns and trade disruptions.
trade disruptions, as shipping lines look to reroute through
Mexico or Canada to avoid the additional costs. If enacted,
SUPPLY AND DEMAND
this measure could substantially alter global shipping routes,
• Supply Constraints: Heavy maintenance schedules in Latin
potentially leading to higher transportation costs and longer
America, reduced production in North America and Europe,
transit times for certain cargo 昀氀ows.
and strong shipments from Brazilian suppliers have led to
tightening supply conditions. Brazilian BHKP inventories
The US-China trade war remains a signi昀椀cant factor, as US
have fallen to one of the lowest levels in six years, contrib-
tari昀昀s on Chinese goods now stand at 20%, forcing manufac-
uting to market tightness and limiting spot availability in
turers to shift production to alternative locations. Vietnam and
key regions.
India are emerging as key bene昀椀ciaries, as more companies
• China’s Market Dynamics: Demand in China cooled in late
move supply chains away from China. This trend is expected
February due to high inventories and domestic capacity
to lead to new container trade routes, particularly between
expansions. A surge in BHKP imports (1.7 million tonnes in
Southeast Asia and Western consumer markets. However, the
December) led to a signi昀椀cant inventory buildup, weakening
transition period may create disruptions as logistics networks
short-term demand and putting downward pressure on
adjust to the changing dynamics.
prices. Additionally, a weak renminbi and broader economic
MACROECONOMY
• North American Market: The US pulp market has remained
Global economic conditions remain uncertain due to tari昀昀
relatively stable, though the upcoming 25% tari昀昀 on Cana-
policies, geopolitical con昀氀icts, and economic slowdowns.
dian NBSK pulp is expected to disrupt trade 昀氀ows. This
China is transitioning to a consumption-driven model but
could lead to higher costs for US tissue manufacturers
faces challenges from a weak property sector and subdued
and bene昀椀t Latin American suppliers looking to capture
industrial demand. In the US, rising tari昀昀s, including a 25%
additional market share.
duty on steel and aluminium and proposed docking fees for
• Flu昀昀 and Specialty Pulp: While demand for 昀氀u昀昀 pulp
Chinese-built ships, could drive up costs and in昀氀ation. Geopo-
remains strong due to constrained supply, the dissolving
litical tensions in Ukraine, the South China Sea, and potential
pulp market has weakened as a result of lower viscose
Red Sea disruptions pose risks to supply chains. The US-China
demand. This divergence in demand trends is shaping the
trade war continues, with China imposing retaliatory tari昀昀s
pricing environment for di昀昀erent pulp grades.
concerns are weighing on market sentiment.
on US agricultural goods, shifting soybean exports from the
US to Brazil and increasing demand for bulk shipping.
TRADE POLICY IMPACT
The US has implemented or proposed multiple tari昀昀s that
Outlook
will signi昀椀cantly impact the pulp market:
The global economy is expected to grow at a below-trend pace
• 10% tari昀昀s on most Chinese imports, rising to 20% in March
in 2025. Weak consumer con昀椀dence and further tari昀昀 meas-
2025.
ures may impact developed markets, while China’s stimulus
• 25% tari昀昀s on Canadian and Mexican imports from March
e昀昀orts are unlikely to drive a signi昀椀cant rise in commodity
4, 2025.
demand. Although in昀氀ationary pressures are easing, trade
• Proposed 25% tari昀昀s on EU imports by April 2025.
policies remain a key source of uncertainty for shipping
markets, particularly as US-China tensions escalate.
These tari昀昀s, particularly on NBSK pulp from Canada, will
likely increase costs for US tissue manufacturers, potentially
The introduction of port fees on Chinese-built vessels could
leading to higher consumer prices. The restrictions on EU pulp
signi昀椀cantly alter trade routes, with shipping 昀椀rms increas-
imports could further disrupt global trade 昀氀ows. Meanwhile,
ingly using transshipment hubs in Mexico or Canada to avoid
China’s retaliatory tari昀昀s on US paper products may reduce
docking fees at US ports. Additionally, the Trump administra-
demand for US pulp exports, while bene昀椀ting alternative
tion’s proposed reciprocal tari昀昀s—matching other countries’
suppliers such as Brazil.
import duties—could further disrupt global trade.
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