FOEX pulp and paper markets update

Dec 08, 2004. /Lesprom Network/. After a most likely decline in newsprint demand in the US in 2004, modest gains are expected in 2005. After having pulled back part of the announced price increase in November, new 35 USD price increases have been announced by some large producers from January 1, 2005. Many of the quotes received remained unchanged from the previous week but there were a number of changes downwards reflecting the pull-back of part of the earlier increases. Our PIX US newsprint bench mark ended a full 5 USD/ton, or 0.9%, lower than the previous week’s average, closing at USD 548.92/ton.

In North America , the pulp price increase attempts, typically to 650 USD/ton for NBSKP, have been announced by most producers, some of them from November 1 but most of them only from December 1. For our index, quotes received were in several cases up from previous week whilst the most common quote was still at 620/ton. Our PIX US NBSKP benchmark closed at 627.50 USD/ton, up by 7.5 dollars, or 1.2%, from the previous week.

 US GDP for Q3 was revised upwards to 3.9% from the earlier announced 3.7%. The good news from Q3 was dampened by further signs of weakness in Q4. Consumers feel the pinch of the still high energy bills and heavy household indebtedness burdened further with risen interest rates. Latest employment data was weak. The consumer confidence index still fell for the fourth month in a row. USD weakening continues and the only real medicine available for these US trading partners, apart from the Yuan revaluation which is unlikely to be seen – at least in any significant way – would be to stimulate their economic activities through easier monetary and fiscal policies. European efforts of stimulation are difficult to find. Several countries have deficit-problems of their own. European Central Bank’s recently published idea of a possible need to raise interest rates in Europe suggests a tightening of the monetary policy at a time when many economists are seeing a growing need to lower those rates. Fortunately EBS did no go through with a rise. In China , the weakness of the Yuan against most of the currencies boosts exports further. It also invites more foreign and local investments into China . This makes a controlled soft landing more difficult to achieve. In Japan , consumers continue to be weary but the corporate capital spending data for Q3 was up over 14%, quite encouraging for the Japanese recovery.

Paper industry statistics for October showed small declines for most grades in the US over October 2003 whilst the year-to-date numbers continue to be positive, except for newsprint. In coated woodfrees some producers are not joining price increase attempts from January 1, announced by some of them as the weakened dollar helps the domestic industry competitiveness against imports. Capacity utilization rates are still high. In Europe , October numbers for the woodfree grades showed clear easing of the uncoated woodfree market but for coated grades the demand pull seen through most of this year still continued.

In market pulp, most producers came out with price increase announcements from December 1. Official announcements in BSKP have been more numerous than those in BHKP. Pulp prices in Asia have inched up again. Continued weakening of the USD supports price increase attempts. In Europe , price announcements are either 630 or 640 for NBSKP. Quotes received for our NBSKP index were in the range of 600 - 640. Increasing number of prices received was at or above 620 but the most common quote continued to be 600. Our PIX bench mark closed at 604.49 USD/ton, 4.9 USD, or 0.8%, higher than a week ago. The USD weakening continued, this time by 0.5% against the Euro. When converted into Euro, NBSKP price thus increased less, or to EUR 454.50/ton, i.e. an increase of 1.5 EUR/ton, or 0.34%, from the previous week.

In BHKP, some price increases have been announced from December 1, whilst some producers appear to concentrate on getting through the increases announced from November 1, mainly at 520 USD/ton. First lots of pulp from the new Hainan pulp mill are expected to be delivered soon. Strong demand for coated woodfrees and the large price differential to BSKP help hardwood pulp shipments. Prices received ranged between 480 and 525 in the USD with 500 still the most common quote. Prices reported in Euro ranged for most of the sales lower, or from 385 to 395 with 390 Euro now as the most typical quote. The USD weakened by 0.5% against Euro. Euro 395 converted to 525 USD/ton. Average from the USD-quotes alone was USD 507.23, up by 6.4 USD/ton or 1.3% from the previous week. Average of the quotes in Euro alone was 394.25 euro, down again, this time by as much as 8.3 Euro/ton or 2.1% from the previous week. With the gains in dollar prices, the official bench mark in Euro increased, in spite of the USD weakness by 1.7 EUR/ton, or 0.4%, to 383.69 EUR/ton. Converting this into USD meant an increase of 4.6 USD, or 0.9%, to 510.31 USD/ton.  

Newsprint price discussions over the 2005 volumes continue. Year 2004 demand growth has been 2.5%, year-to-date. The cost development supports increases. The quotes received for our index for 2004 deliveries remained, once again, largely unchanged. Euro weakened by about 1% against the non-EMU basket creating an upward push in the PIX newsprint benchmark. The index ended up at EUR 466.68, up from the previous week by 26 cents/ton, or 0.06%.

In coated mechanical grades, the US demand pull slowed down in October but strike threat in Canada could reverse the situation again. In Europe , October was a weaker month with regional shipments down but exports up a lot again. Also year-to-date numbers show solid gains both for regional demand as well as for exports outside the region. In the quotes received, some small changes were seen, more of them up than down. The weakening of the Euro against non-EMU currencies provided also an upward push. The index closed at 673.49 EUR/ton, 3.85 EUR/ton or 0.6% higher than last week.

The European coated woodfree shipments continued to be strong in October 2003. Exports showed yet another double-digit gain. The regional demand advanced much less, or by 1.2%, but the total shipments were still up 4.4% for October and 9.4% year-to-date. The announced increases are gradually creeping into our benchmark with again more increases than decreases received. The 1% weakening of the Euro against the weighted basket of the non-EMU currencies also helped to pull the bench mark upwards. The index closed at EUR 713.62/ton, up by 5 EUR/ton or 0.7% from last week.

In uncoated woodfrees, the October numbers for the US showed clear weakness of demand. European data over October was not very bullish either. Western European demand was up marginally but this was due to increased imports. The deliveries of WE paper to the region were down 1% and exports up by the same 1%. The year-to-date statistics are still good, though, with 4% gain in European shipments and 5% growth in European demand. For the B-copy bench mark some changes were seen in the quotes received, both up and down. The weakening of the Euro against the non-EMU currencies had some upward impact. The index climbed by 1.3 EUR/ton or 0.2% closing at EUR 809.84/ton.

The containerboard market is in a good shape both in Europe and in the US , even if the October numbers for the US were marginally down. Year-to-date growth has been good in both markets. Inventories are in most cases still low and operating rates in the US market very high. With good domestic demand, exports of linerboard from North America are down in 2004, in spite of the more and more favourable exchange rates for the American producers.Prices increases have gone largely through in North American market. Prices have continued to rise gradually also in Europe , in spite of the again adverse USD/EUR exchange rate movement. The Euro continued its strengthening against the USD (by 0.5%) but weakened against the basket of non-EMU currencies (by about 1.0%). In kraftliner, quotes received were unchanged or slightly up and although the USD-weakening had a downward pull, the PIX Kraftliner index ended up by 1.5 EUR/ton (or 0.3%) to EUR 457.75/ton. In the recycled fibre based grades, quotes were mainly unchanged. Among those changed, ups were more numerous than downs. Exchange rates had in these grades an upward push. PIX Testliner 2 benchmark came up by 1.3 EUR/ton (or 0.36%) to EUR 353.51/ton. The PIX RB Fluting index gained 1.1 EUR/ton (or 0.34%) to EUR 320.99/ton.

PIX INDICES

Price/Tonne