UPM2 and its Chilean competition put downward pressure on the price of pulp

The injection of supply has an impact on the biopolymer, which is already registering falls in its values in the main ports of the world.

@UPMUruguay

The projections that the country had regarding the invoicing for cellulose sales for this year have fallen into uncertain territory since the entry into operation of the MAP project (Modernization and Expansion of the Arauco Plant) of the Chilean company Arauco. The productive increase of Chili in this first quarter of the year, added to the imminent commissioning of the plant UPM2would put downward pressure on the price of a biopolymer that has already registered decreases in its values in the main ports of the world for its short fiber and long fiber variants.

The increase in current supply and the lower commercial activity of pulp importing countries have marked a downward trend that is expected to consolidate in the middle of the year. in the ports of Europeshort-fiber pulp was quoted at $1,280 a ton in the last two weeks, the lowest price of the year, while long fiber pulp also fell to trade in the $1,373 per ton.

Uruguay XXI had argued in its annual report that after the launch of UPM2 in Paso de los Torospulp exports would skyrocket a fifty%exceeding the turnover for bovine meat, and meaning an inflow of foreign currency in the order of 2,606 million dollars. However, income expectations and export volumes are now equally threatened.

Chile will produce up to 850,000 more tons in 2023

For its part, the Chilean company Arauco expects to produce between 800,000 and 850,000 tons of additional cellulose this year from the recent entry into activity of the MAPA project, which presents a design to produce 1.56 million tons in a calendar year.

Arauco’s financial director, Gianfranco Truffellomaintained before the press that the current process of unforeseen production increase —ramp up— is being carried out with only one of the machines, the only one that was “ready to produce”, so they expected to “feel the production increase month a month”, and “they do not expect to see a full year of production until the first months of 2024”.

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