Demand for Premium Paper Products Is on a Tear



Wood Pulp Prices Rise

The price of wood pulp, which is used to make a variety of paper products, is increasing sharply because of a unique set of circumstances. Since December 1, Bleached softwood kraft pulp futures have surged by 48% on the Shanghai Futures Exchange and currently cost about $1,037 per ton.

Analysts say that if these trends continue paper products companies could see slimmer margins in the coming months. These companies include Kimberly-Clark (KMB), the maker of Kleenex and Huggies diapers, as well as Procter & Gamble (PG), which owns Charmin and Bounty. Meanwhile, pulp makers like International Paper (IP) and Canfor Pulp Products could get a boost.

Changing Consumer Habits Impact Pulp Market

There is currently particularly high demand for softwood pulp, which is made from coniferous trees that are too small or knotty to become lumber and is used to make premium bathroom and kitchen paper products. Because consumers are spending more time at home, demand for these products has climbed.

Though the toilet paper shortage that occurred in the early days of the pandemic is a thing of the past, the market is still very different than it was a year ago. Demand for bulk toilet paper and paper towels used in restaurants and offices has plummeted. These products, which tend to be cheaper and scratchier, are made from recycled material. Softer, premium bathroom tissue and towels, which people tend to use at home, are made from new pulp. This is why new pulp prices are rising.

A Bubble or a Long Term Trend?

Pulp prices are also up because the US dollar is weak, which means it is cheaper for companies in China and elsewhere to buy the commodity because it is priced in US dollars. According to the Wall Street Journal Index, which compares the dollar to other currencies, the dollar has fallen 5.6% over the past year.

Analysts are trying to determine whether the spike in pulp prices is a bubble or a long-term shift. Though some of these trends may only impact pulp prices in the short term, bullish investors in pulp believe that the commodity will stay popular because companies focused on ESG goals may turn to biodegradable paper packaging instead of plastic and foam. Graphic Packaging Holding Co (GPK), a paper packaging company, believes that roughly $5 billion worth of plastic packaging will be replaced with paper each year going forward.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up


Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS21020303


All your finances.
All in one app.

App Store rating

Download on the App Store Get it on Google Play

ABOUT SoFi SoFi helps people achieve financial independence to realize their ambitions. Our products for borrowing, saving, spending, investing, and protecting give our more than one million members fast access to tools to get their money right. SoFi membership comes with the key essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. For more information, visit SoFi.com. Want an easy and convenient way to manage your financial life? Get the SoFi app. For iOS and Android.


TLS 1.2 Encrypted
Equal Housing Lender