Citi: Overseas pulp mills have strong willingness to raise prices, focus on the progress of Shanghai pulp negotiations in early to mid-March.

China Gold released a research report stating that Suzano recently raised the price of broadleaf pulp in March by $20/ton, with the estimated latest price around $605/ton, an increase of over $100 from the low in July last year. Overseas pulp mills currently have a strong willingness to raise prices, mainly due to marginal tightening of supply. Many price increase orders have already been implemented in February, and the mid-March negotiations in Shanghai for pulp prices may become an important turning point in this year's price trend. The fundamentals of the paper sector are expected to reach a bottom by 2026, but in the first half of the year, the industry is still in the process of digesting excess supply, with prices possibly still fluctuating at the bottom. The key variable lies in the sustainability of the upward trend in pulp prices. Key points from China Gold include: Pulp: Mills continue to raise prices for March; attention on mid-March negotiations for Shanghai pulp Suzano recently raised the price of broadleaf pulp in March by $20/ton, with an estimated latest price of around $605/ton, an increase of over $100 from the low in July last year. Overseas pulp mills currently have a strong willingness to raise prices, mainly due to marginal tightening of supply. Specifically: 1) Suzano announced a 3.5% reduction in commodity pulp production for 2026, estimated to reduce supply by over 450,000 tons per year, accounting for 1% of global broadleaf pulp supply; 2) The Indonesian government recently revoked permits for about 1 million hectares of plantations, leading to a tightening of wood supply and production cuts at major pulp mills (such as APRIL reducing production by 400,000 tons per year, accounting for about 1% of global broadleaf pulp supply), with increased willingness among local pulp mills to import wood chips from Vietnam, potentially raising wood chip costs in the Asian region; 3) The start of production for the second phase of Indonesia's APPOKI has been postponed to the fourth quarter of 2026. Many price increase orders have already been implemented in February, and the mid-March negotiations for Shanghai pulp may become an important turning point in this year's price trend. Papermaking: Price increase notices issued after the holiday, with different degrees of implementation for various paper grades; attention on price downside risks during the off-season Corrugated cardboard: The off-season for black paper has not been noticeable since the beginning of this year, mainly due to the industry's intensive shutdown before the holiday and non-high inventory levels across the industry. The current implementation of the $50/ton price increase notices after the holiday seems acceptable. Feedback from surveys indicates that the implementation of price increases has been better for high-end paper grades than for low-end products. White paper: After the holiday, leading companies have announced a new round of $200/ton price increase notices. In the current traditional peak season for the industry, coupled with significant industry losses and rising pulp prices, it is likely that the first round of price increases will be implemented, especially for previously heavily loss-making types of paper such as white cardboard and whiteboard. Looking ahead, as cultural paper is about to enter the off-season at the end of the second quarter and there may be capacity additions in the middle of the year, there is a risk of price correction during the off-season. The fundamentals of the paper sector are expected to reach a bottom by 2026, but in the first half of the year, the industry is still in the process of digesting excess supply, with prices possibly still fluctuating at the bottom. The key variable lies in the sustainability of the upward trend in pulp prices. Risk factors include lower-than-expected demand, higher-than-expected additional supply, and unexpected fluctuations in pulp prices.