Indonesian Pulp and Paper Sector Maintains Moderate Outlook Through 2026

Global Price Cycles and Export Demand Drive Sector Performance

The Indonesian pulp and paper industry is expected to maintain a moderate performance through 2026, with its trajectory heavily influenced by global pulp price cycles and the recovery of export demand. According to Ekky Topan, Investment Analyst at Infovesta Kapital Advisori, the sector's performance remains closely tied to global pulp prices, which have not yet fully stabilized. This volatility presents significant challenges for companies in maintaining profit margins, particularly those without efficient cost structures or vertical integration from upstream to downstream operations.

Recovery in Export Markets Provides Support

The gradual recovery in export markets, particularly in China and other Asian countries, continues to be a key support for the Indonesian pulp and paper sector. Demand for packaging and tissue products has shown greater resilience compared to printing and writing paper, helping to sustain overall sector performance. Ekky notes that companies with efficient cost structures and integrated operations are better positioned to navigate the current market conditions.

Key Challenges and Opportunities

1. Global Pulp Price Volatility: Continued fluctuations in global pulp prices remain a significant risk factor for Indonesian pulp and paper companies.
2. Export Demand Recovery: Gradual improvement in export markets, particularly in Asia, provides a positive outlook for demand recovery.
3. Product Resilience: Packaging and tissue products are showing stronger demand compared to printing and writing paper.
4. Operational Efficiency: Companies with efficient cost structures and integrated operations are better positioned to weather market volatility.

The moderate outlook for the Indonesian pulp and paper sector through 2026 reflects both challenges and opportunities as the industry navigates global market dynamics and domestic economic conditions.