Jun 07, 2006. /Lesprom Network/. Signs of a deceleration of the US GDP growth increased last week. Consumer confidence dipped. Purchasing managers’ index fell in May more than expected. Number of new jobs was clearly less than anticipated. Demand for house mortgages continues to head down. Weakening outlook could encourage the Fed not to raise the interest rates in June but inflation remains their №1 concern. In Europe, the recovery continues. Purchasing managers’ index climbed higher. The capital flows in the economy (M3) have continued to grow. This typically boosts inflation. The likelihood of an interest rate hike later this week in the EU has grown. Worries over the decelerating growth in the US affect Japanese economy, at least the stock markets. Japanese recovery continued stronger than expected during first quarter with a 1.9% GDP-growth. For the fiscal year ending on March 31, the growth was confirmed at 3%. Corporate investments are up 10% which helps to sustain the positive momentum further into 2006 even if US economy slows down. In China, inflation threat is growing. Labour shortages in some of the urban areas have prompted minimum wage hikes of 15-17%. Manufacturing activity remains buoyant but costs, also other than labour, are increasing. It will take time for these costs to translate into higher consumer prices but the pressure is mounting. In paper industry, the data from CEPIFINE over the European woodfree sector in April was disappointing. Total deliveries as well as the European consumption were down in both uncoated and coated grades. Year-to-date statistics show still growth in both grades, though. Supply management and the weakness of the USD have continued to help the US industry to raise prices in order to cover the risen costs. In Europe, apart from the newsprint and brown packaging, price increase attempts have not been successful. New attempts are expected, latest in September/October. Pulp market has remained tight. Price increase attempts have been largely successful in USD-terms. In Euro, increases have been offset by the strength of the Euro. The PIX NBSKP benchmark climbed up by $5.8/tonne, or 0.9%, to $659.96/tonne. The USD depreciated again last week but this time by only 0.1% against Euro. The NBSKP index value in Euro came thus up slightly less to 514.99 Euro/tonne, up by 3.8 Euro/tonne, or 0.7%. World market BHKP shipments have been very lively. The strength of the Euro against USD keeps the Euro-quotes above the USD-denominated prices. Last week USD weakened by 0.1% against Euro. Our BHKP index closed at 498.01 Euro/tonne, up by 1.6 Euro/tonne, or 0.3%. Converting the index-value into USD brought it to $638.20/tonne, up by $2.9/tonne, or 0.45%. Newsprint demand in Europe did seasonally adjusted quite well in April. Shipments to Europe were up but exports outside the region down. The strengthening of the Euro by about 0.3% against the basket of non-EMU currencies pulled the benchmark down. The PIX Newsprint index lost ground from last week by Euro 0.21, or 0.04 %, to Euro 518.62. Coated mechanical reels had a good start of the year but April was weaker. Majority of the changes in prices was upwards but the 0.3% strengthening of the Euro created a downward pull to the PIX LWC benchmark. The index had a minute fall from last week, inching down by Euro 0.06, or 0.01%, to Euro 703.84. In coated woodfrees, CEPIFINE reported demand down by 6% in April but still up nearly 4% over the first four months. Export volumes are up. The 0.3% strengthening of the Euro against the non-EMU basket had a downward impact on our benchmark. The PIX Ctd WF index lost Euro 0.71/tonne, or 0.1%, and closed at Euro 719.32. According to CEPIFINE, the uncoated woodfree demand was down 6% in April and up just 0.7% year-to-date. The impact of the 0.3% strengthening of the Euro against the weighted basket of non-EMU currencies created a downward pull, together with mainly downward changes reported to us. The PIX A4 B-copy index fell by 1.9 Euro, or 0.23%, to 798.22 Euro/tonne. In the packaging sector, OCC prices in the US have been moving higher supporting the price hike efforts first by the board producers and now also by US corrugated box makers. Operating rates in the US remain high. In Europe, a price increase effort is also under way. The attempts appear to take hold better in the virgin fibre kraftliner than in RCP-based grades. The 0.3% strengthening of the Euro against the basket of the non-EMU currencies and the further weakening of the USD exert a direct or indirect downward pull on liner and fluting prices. The PIX Kraftliner index ended slightly up after gaining Euro 0.35/tonne, or 0.07%, and closed at 468.88 Euro/tonne. The White-top Kraftliner index gained little less, Euro 0.15/tonne, or 0.02%, closing at Euro 666.93/tonne. In the recycled fibre based containerboard grades the majority of the quotes also remained unchanged. Pulled down by the currency impact, small declines were seen in all of the indexes. PIX Testliner 2 benchmark lost Euro 0.08/tonne, or 0.02%, and closed at 377.44 Euro/tonne. PIX Testliner 3 benchmark inched down by Euro 0.07/tonne, or 0.02%, and closed at 347.20 Euro/tonne. The PIX RB Fluting index fell by Euro 0.27/tonne, or 0.08%, ending at Euro 334.05/tonne.