BURLINGTON, MA, April 25, 2024-

Softwood fluff prices had a historic price run globally in 2022, before registering a steady decline from mid-2022 through the third quarter of 2023. The effective list price of fluff in Europe and North America dropped from a peak of $2,230 per tonne in July 2022 to $1,710 per tonne in September 2023. Similarly, the net price of fluff in China moved down from $1,370 per tonne in July 2022 to $830 per tonne in September 2023. Since then, prices picked up substantially in the fourth quarter of 2023 and the first quarter of this year. Effective list price for fluff in Europe and North America rose by $130 per tonne over four months to reach $1,840 per tonne in March. Chinese net fluff prices also gained $80 per tonne over October-December to reach $910 per tonne, but prices then dropped by $10 per tonne to $900 per tonne in February-March. Prices continue to face upward pressure, with developments in the paper-grade market supporting bleached softwood kraft (BSK) prices. This compels us to take a closer look at swing capacity for softwood fluff pulp and BSK.

Currently, there are around 10 pulp mills that have the ability to swing between producing BSK and softwood fluff; we estimate their combined capacity at around 4.1 million tonnes in 2023. Roughly 75% of this capacity is located in the US South, swinging between fluff and Southern bleached softwood kraft (SBSK), with the rest located in Europe and Latin America. Total global swing capacity has increased from around 3.5 million tonnes in 2016, growing around 22% to 4.1 million tonnes in 2023. Over this time, we estimate that the swing capacity dedicated to the production of softwood fluff has also increased from 72% in 2016 to nearly 90% in 2023. The question is: What has driven this shift?

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