With the annual production of the second UPM plant, pulp will have an export capacity of 4.8 million tons. With this volume, processed by the Finnish pulp mill and Montes del Plata, Uruguay will become one of the main sellers in the world.
The first shipment of pulp produced at UPM 2 left the port of Montevideo on March 23. It was for 50,000 tons and the beginning of the export activity of the second pulp mill located in Pueblo Centenario.
Last year, with the production of UPM 1 and Montes del Plata, 2.7 million tons of pulp were exported for a value of US$ 1,818 million.. This allowed pulp to rank third in Uruguay’s exported products, behind beef and soybeans.
But this year that scenario will begin to reverse. And that is based on two well-marked aspects: on the one hand, the severe drought that affected agricultural activity; on the other, the commissioning of the second plant of the finnish company.
On the first point, the Uruguay XXI Institute indicated in its latest report on exports that the prolonged and severe drought caused the water levels in the river and reservoirs to drop, generating a negative impact on agriculture and livestock. He added that the most important productive impacts were recorded in the last summer campaign, with a sharp drop in the production of grains such as soybeans and wheat, as well as in livestock activity.
In In the first five months of 2023, income from meat exports fell 26% in relation to the same period of 2022, reaching US$ 1,115 million, based on data updated by the National Meat Institute (INAC).
The average price per ton of meat exported this year is US$ 3,879, a value 25% lower than what was achieved at this point in 2022.
Wood collection at UPM
Taking into account that it is close to the end of the initial semester, based on the perspectives drawn up by operators of the meat agro-industrial sector, it is most likely that it will be clearly below the record achieved in 2022, when meat exports were the main exported item with US$ 2,557 million.
In the case of soybeans, it is estimated that the country will stop receiving close to US$ 1.8 billion due to fewer seed placements as a result of the drought. Already in the first five months of this year, the lower performance of the product was noted. Sales in that period were for US$ 250 million, with a year-on-year retraction of 57%. In May the decrease was greater to reach a negative variation of 65%.
What will happen to the cellulose?
The Uruguay XXI report affirmed that Pulp will become Uruguay’s main export product in 2023. The rationale was that UPM will have an additional production capacity of 2.1 million tons with its second plant. With this amount, the pulp production capacity for export will reach 4.8 million tons. This will allow Uruguay to become one of the world’s leading exporters of pulp, behind China, Germany and the United States.
The president of the Union of Exporters (UEU), Facundo Marquezsaid to The Observer that pulp will have a logical increase in production but will have a drop in international prices as a negative factor. The estimate is that the export value will decrease by around 20%.
The product will add 800 thousand tons this year for the contribution of the second UPM plant. The volume will be lower at 2.1 million tons as a full year of industrial processing will not be completed. So, this year Uruguay will export 3.5 million tons through the two companies installed in the country.
EFE
Plant of Montes del Plata
Marquez foresaw that exports will be around US$ 2,000 million, as a consequence of a higher export volume, but at a lower price. Likewise, it will exceed the US$ 1,818 million of last year.
“If it’s not this year, surely next year it will become the country’s main exported product,” said the president of the UEU.
The director of the International Office of the UCU Business School, ignacio bartesaghisaid to The Observer that the expansion of pulp is a relevant phenomenon for the country in terms of change in the structure of the exportable supply. He recalled that in recent years bovine meat had begun to feel the competition from soybeans, which had a productive increase associated with Argentine investments that arrived in Uruguay.
“The other big change is this. It can be said that Uruguay is going to have an agro-industrial product as its main export product, with a complex process”, he explained.
He highlighted the importance of some State policies applied in recent years. “There was a forestry law that made it possible to have the necessary raw material to attract these investments; also the free zone instruments that finished shaping the projects”, he affirmed.
Lastly, the foreign trade consultant and university professor gonzalo oleggini indicated that cellulose will surely consolidate as the first product sold abroad, above meat and soybeans.
As negative data, he estimated that general exports will have a drop of between 15% and 20% this year. Given this, he stressed the importance of signing more trade agreements with other countries. “This tool is important to diversify at times of low prices,” he said.
