Market Pulp Weakened by Falling Paper Demand in Europe, N.A.
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Mark Wilde, senior analyst with Deutsche Bank reports that "we've become more bearish" about market pulp. "The biggest changes in our outlook," he says, "revolve around market pulp. In the face of economic uncertainty and increasingly cautious market signals, we've opted to make a larger-than-normal revision. Rather than making a series of modest creeping cuts, we're taking a more aggressive and out-of-consensus stand. Our FY12 softwood pulp prices have been cut by $200 - $220/metric ton and hardwood by $225 - $240/metric ton. We now assume 2012 market pulp prices will be off ˜$180/metric ton versus 2011. We are forecasting North American NBSK at $800/metric ton for FY12. Near-term pressure on pulp has increased. Our fourth quarter 2011 NBSK forecast has been cut to $920/metric ton, -$73/metric ton from the third quarter's $993/metric ton."
(the biggest global market for pulp) and North America, Wilde points out. Moreover, he adds, the "normal" seasonal upturn in paper demand has been muted this autumn. Supply issues are also at play. In recent months, most pulp mills have been running at full capacity, leading to a rise in mill inventories (August = 41 days, + 2 days m/m, +7 days y/y). Latin America hardwood inventories are the biggest issue. At the same time, incremental supply is creeping into the market. In North America, several paper and paperboard mills are running market pulp.
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