Oct 24, 2007. /Lesprom Network/. The pulp supply in North America should soon improve when the loggers on the BC coats are returning to work. One Canadian NBSK pulp producers has informed of a $20/tonne price increase for November bringing the price to $870/tonne. The PIX US NBSK pulp benchmark stayed, after the 10% rule was applied, unchanged from previous week at $850.00/tonne. The newsprint prices in North America have been on a downward slope for a considerable time. In October the slide came to a halt, and the benchmarks climbed a few dollars in the wake of some higher prices reported to us. For this week’s indexes, no changes were present in the prices reported, and the indexes remained at last week’s levels. The 30lb index at $556.44/tonne and 27.7 lb index at $592.68/tonne. As a result of the credit squeeze, which spread from the US housing market, IMF expects the world economy growth to be slower in 2008 than in 2007. The Federal Reserve has also commented that the full effects of the credit squeeze may not yet have been felt. New record nominal price of oil was recorded last week at $90/barrel but has turned again down after the negative news of the economy. The economic growth forecast for Europe in 2008 has been toned down by the IMF. The strength of the Euro is causing concern as the USD has lost nearly 17% from the beginning of 2006. Due to rising oil and food prices, the inflation risks have gone up in the Euro area. The EU leaders agreed on a new European reform treaty at a summit in Lisbon last Friday. EU politicians have commented that the EU should now get on with addressing main issues like jobs and financial stability. According to the Bank of Japan, the credit squeeze originating in the USA has not affected the Japanese economy significantly. The bank expects private consumption to be on an uptrend but on the other hand reports that housing investments have dropped sharply. Also, a BoJ survey found the consumers’ sentiment pessimistic about the state and outlook of their own income and spending, as well as the general state of the economy. The speed of inflation in China, which has remained above 6% in September, and the tripling of the stock indices, might lead to some more cooling measures by the government. Hu Jintao will continue as China’s Communist Party chief and president for another five-year term. In the paper industry, the coated paper market has shown signs of tightening up, both in North America, as in Europe. The fourth quarter has shown traditional seasonal characteristics with increasing demand for printing papers. US box shipments statistics came out, showing a 3.7% increase in average week shipments in September. US printing & writing paper statistics for September show a 2.4% decline year on year in total shipments. Woodfree grades, both uncoated and coated, drew the total changes downwards, while mechanical papers, both uncoated and coated, showed increase in shipments. In the pulp market, supply constraints and steady demand are keeping the market firm. The continuous slide in value of US dollar and increasing fibre costs in all major supplying countries have made the NBSK pulp producers in North America and in Scandinavia to separately announce price increases by $20/tonne for November. The trading of pulp futures at CME Globex based on PIX NBSK Europe index is gradually growing and reached last Friday a new daily record with 134 contracts. The open interest was 410 contracts. The PIX NBSKP European benchmark moved up by $0.14, or 0.02%, to the full $830.00/tonne. The weakening of USD by 0.8% against Euro caused the Euro-value to drop. After conversion, the NBSKP index in Euro decreased by 4.61 Euro, or 0.8%, to 580.91 Euro/tonne. The market of BHKP appears to continue very tight. The market balance will be alleviated by the re-start of the large hardwood market pulp mill in South Korea after being closed for two months due to a labour dispute. The Uruguayan authorities are reported to allow the Botnia’s new pulp mill to start production in November. The 0.8% strengthening of the Euro against USD made our PIX BHKP benchmark to decrease in Euro by 0.63 Euro, or 0.12%, to 523.77 Euro/tonne. Converting the index value into USD increased the index by $5.13/tonne, or 0.7%, to $748.36/tonne. In newsprint, the market conditions prevail seemingly unchanged in Europe. The incentive to export newsprint from North America to Europe is upheld by the currency rate. The weakening of the Euro against the non-EMU basket was supporting an upward movement of the PIX Newsprint index. The benchmark moved a minute Euro 0.06, or 0.01% upwards, and settled at 536.96 Euro/tonne. The coated mechanical papers market in Europe is currently tightening up further, according to various comments on the market. The minor weakening of the Euro, by about 0.1%, against non-EMU currencies contributed with a small push-up effect. The PIX LWC index slipped minutely by 0.30 Euro or 0.05% to 666.13 Euro/tonne. For coated woodfree papers in Europe, the recent paper price increase attempts seem to have been only partly successful. The slight weakening of the Euro against non-EMU currencies worked in the upward direction. The index readjusted up by 0.69 Euro or 0.10% to 696.21 Euro/tonne. The uncoated woodfree papers seem to continue to enjoy reasonable market conditions in Europe. The weakening of the Euro against non-EMU currencies had a slight uplifting effect, but the index dropped by 2.26 Euro or 0.27% to 849.86 Euro/tonne. The US corrugated box numbers for September were positive with shipments up by 3.7% year-over-year and inventories decreased. Higher prices have been reached for both containerboards and corrugated boxes during September-October. In Europe, containerboard demand continues good but depreciating USD keeps brown kraftliner imports competitive from the other side of the Atlantic. White-top Kraftliner producers are implementing price increases of 40-45 Euro/tonne from October 1. Last week Euro weakened by about 0.1% against the non-EMU currency basket having a small positive push on all our Packaging indices. The PIX Kraftliner index gained Euro 0.75, or 0.14%, closing at 525.92 Euro/tonne. The White-top Kraftliner index retreated Euro 0.15, or 0.02%, to 707.17 Euro/tonne. In recycled based grades, the changes in index values were mainly due to currency changes. The PIX Testliner 2 dropped Euro 0.12, or 0.03% landing at 471.42 Euro/tonne. The PIX Testliner 3 remained unchanged from previous week at 454.22 Euro/tonne. Finally, the PIX RB Fluting notched down by Euro 0.05, or 0.01%, closing at 443.31 Euro/tonne. The gap between brown Kraftliner and Testliner 2 has shrunk to 55 Euro. In the US the third quarter average OCC prices were up 13% from second quarter of 2007. In Europe, the suggested increases of sea freight rates of up to $1000/container may limit willingness to export. Our PIX OCC 1.04 dd index retreated by Euro 0.10, or 0.1%, ending at 106.67 Euro/tonne. The end-product – raw material price differentials were mixed this time: the gap between OCC and Testliner 2 narrowed a bit to Euro 364.75. Against Testliner 3, the difference grew to Euro 347.55, and against RB-Fluting it increased to Euro 336.64. In ONP/OMG (Old newspapers and old magazines) grade, the PIX ONP/OMG 1.11 dd benchmark value was unchanged from previous week at 127.36 Euro/tonne. The differential to PIX Newsprint index grew to 409.60 Euro/tonne.