Jun 21, 2006. /Lesprom Network/. The good news from the US is that the corporate balance sheets are in a good shape and companies are planning on investing actively. Also, gasoline futures prices have come down and the US current account deficit shrank during first quarter. The bad news is that the housing market is seriously over-valued and US producer and consumer prices keep on climbing. Fed will probably need to raise interest rates again and the signs of the slowing down of the economic growth are increasing. In Europe, the risen inflation numbers and the early June interest rate hike may have undermined the growth prospects? Most likely the inflation and money supply growth numbers will suggest another tightening of the monetary policy towards the end of the summer/early fall. And after that, growth will begin to decelerate. In Japan, the recent data on wages and productivity gains shows no real signs of a pick-up of the inflation. The earlier expected interest rate hike in July is likely to be pushed further into the future. This should help the GDP growth to 3% or even above for this year. For next year, a slower pace is anticipated, triggered by a reduced expansion rate in the US and in China. In China, the unexpectedly fast growth in first quarter (+10.3% of real GDP) triggered another round of efforts to cool down the over-heated economy. Chinese Central Bank froze nearly $20 billion worth of inter-bank liquidity. Also, the minimum interest rate on one-year loans was ordered to be 5.85%. Money supply is up by 19% from May 2005. The large number of bad debts risks to grow further. In paper industry, the first data over the month of May came out positive. In the US, box shipments were up 9.5% over the particularly weak May 2005 demand. Inventories fell – after earlier increases by over 100 000 tonnes, twice the typical seasonal decline, most of it at the box plants. Efforts to drive through the earlier announced price increases continue. In Europe, the UTIPULP statistics showed a small increase in consumption in May both over April as well as over May 2005. In pulp market, tightness persists. Inventories in the supply chain are low. UTIPULP reported European consumer stocks marginally up from April but they were still 11% lower than in May 2005. In days, stocks remained at 26 days. Several producers have separately announced price increases for BSKP, typically by $20/tonne in Europe from July. Earlier announced increases continue to go through. The PIX NBSKP benchmark climbed by $10.9/tonne, or 1.6%, to $677.38/tonne. The USD appreciated last week by a marginal 0.1% against Euro. This brought the NBSKP index value in Euro up to 535.44 Euro/tonne, up by 9 Euro/tonne, or 1.7%. Supplies of market and integrated BHKP have also been lost through closures, planned downtime and technical problems at several mills. Price increases have been announced also in BHKP, in most cases by $20/tonne from July. Our BHKP index closed at 505.68 Euro/tonne, up by Euro 0.35/tonne, or 0.07%. Converting the index-value into USD brought it to $639.74/tonne, up by $0.04 cents/tonne, or 0.01%. The on-going soccer World Championships and the spreading of free issues newspapers improve newsprint demand. Newsprint prices in Europe have been agreed upon in a majority of cases for the full year and therefore remain stable. Changes in the newsprint price data were again few from last week. Euro weakened by about 0.5% against the weighted basket of non-EMU currencies. The currency effect gave thus the index an upward push and the index moved up from last week by Euro 0.45/tonne, or 0.09%, to Euro 519.07. In coated mechanical paper grades, the quieter summer period is beginning after the catalogue season is over. Euro weakened by about 0.5% against the basket of non-EMU currencies. This gave the benchmark some upward push and our LWC-index gained 1.2 Euro, or 0.17%, and closed at Euro 702.49. In coated woodfree, at least one producer has announced a price increase of about 5% from July 1. Over last week’s business, the weakening of Euro against the non-EMU basket helped to send the benchmark higher. The index moved up by Euro 1.3, or 0.2%, to Euro 719.16. In uncoated woodfree grades, cost pressures and unsatisfactory profitability in the European market have prompted at least one producer to announce higher prices from July. The 0.5% weakening of the Euro against the non-EMU basket helped the benchmark higher. B-copy index moved up by 1.7 Euro or 0.22%, to Euro 798.51. In the US, May numbers for containerboard business were strong with a 9.5% gain in shipments over May 2005 – which was a particularly weak month, though. The mill and box plant inventories came down. Producers of both containerboard and of corrugated boxes are trying to implement the earlier announced price increases. In Europe, price increase efforts are also under way for containerboards but after a larger gain last week, the virgin kraftliner index gain was this time more limited and partly explained by the 0.5 weakening of the Euro against the basket of the non-EMU currencies. The PIX Kraftliner index moved up by 1.5 Euro/tonne, or 0.3%, to 475.37 Euro/tonne. For white-top Kraftliner price, with a weaker Euro, the index moved up by Euro 0.38/tonne, or 0.06%, and closed at Euro 667.10/tonne. In the recycled fibre based containerboard grades, helped by the currency impact, the PIX Testliner 2 benchmark inched up by Euro 0.12/tonne, or 0.03%, to 378.81 Euro/tonne. PIX Testliner 3 benchmark gained a bit more, or Euro 0.7/tonne, i.e. 0.2%, and closed at 349.24 Euro/tonne. PIX RB Fluting index moved up by Euro 0.14/tonne, or 0.04%, ending at Euro 335.80/tonne.