July 2010
Over The Wire Tissue Edition
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Market Pulp Momentum Could Shift

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There could be a momentum shift building in the market pulp arena, according to Mark Wilde, senior analyst with Deutsche Bank. In fact, July could be the peak month this year, he notes, adding that Arauco, No. 2 pulp producer in the world, has just cut prices for pulp in China by $40 - $50/ton (4-6%), and global buyers are pushing for a $100/metric ton cut. With supply increasing and demand seasonally slower in the third quarter, the risk of large price correction has risen, Wilde says.

In the past 13 months, pulp prices have risen to all-time highs, driven by supply shock from February's Chilean earthquake and strong Chinese demand during 2009. In June, NBSK prices rose $20/metric ton to $1,020/metric ton in North America, $980/metric ton in Europe, and $890 - $900/metric ton in China. "However, with most Chilean mills back online, 2 million metric tons of restarts elsewhere, and most of the North American spring downtime behind us, pulp supplies could exceed demand in the coming months. The result is apt to be lower prices, Wilde notes.



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