December Pulp Figures Encouraging
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December global pulp data were encouraging, reports Mark Wilde, senior analyst with Deutsche Bank. Inventories fell three days m/m (mostly in hardwood) and shipments rose 15% y/y and m/m. The key driver was Chinese shipments, up 61% y/y and 38% m/m. Deutsche Bank's trade contacts suggest that part of the strength owed to large spot deals into Asia. Botnia, Canfor, and Mercer have announced a $20/metric ton (Arauco = +$10/metric ton) price increase on BSK in China. There are two implications of the December data, Wilde says: (1) the five-day drop-in hardwood inventories could likely stem the rapid price erosion on hardwood grades, and (2) continued strength in Chinese demand and a further drop in softwood inventories could boost spot NBSK prices in February.
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