Pulp/Paper Markets Flat, Containerboard Strong
Sept. 26, 2006 (FOEX) - The paper industry news over August performance is very mixed. In the U.S., newsprint continues to head south and coated mechanicals also had a very weak month. But, containerboard data came out strong and both coated and uncoated woodfrees posted small gains. Uncoated mechanicals were down for the month of August, but they are still up more than 3% year-to-date.
In Europe, coated woodfrees as well as coated mechanicals had a relatively weak showing but newsprint and uncoated woodfree shipments, both within and outside EU, were strong and helped push the year-to-data figures higher, too. Uncoated mechanicals were the strongest grade with demand for SC and other uncoateds up by about 6% for August as well as for the year-to-date figure.
In the North American pulp market, the supply/demand situation remains tight. The re-start of the larger line at Terrace Bay gradually brings more supply into the market. Most producers have separately announced price increases, typically by US$20/ton to $770/ton from September. This time the index remained flat at $767.25/ton.
Tightness on world pulp persists. BSK producer inventories came down again by one day while the total remain unchanged as BHK stocks ended one day up from end-July.
In Europe, the introduction of the price increases in two phases, from September 1 or from October 1, has lead to an increase of the FOEX index values, but at a fairly slow pace. The NBSK benchmark moved up this time by 70 cents/ton, or 0.1%, to US$711.88/ton. The USD weakened last week by 1.1% against Euro and the NBSK index value in Euro closed at EUR 555.42/ton, down by 5.7 EUR/ton, or by 1.0%.
BHK shipments have increased substantially in 2006, helped both by increases in supply and the widened price gap to BSK. No price increase announcements have been brought to FOEX's attention. Euro strengthened by 1.1% against the USD over last week. The weaker USD pulled the BHK benchmark down in Euro-terms. The index closed at EUR 514.94/ton, down by 5.75 EUR/ton, or 1.1%. Converting the index-value into USD brought it to US$660.00/ton, up by 3 cents/ton, or by 0.00%.
Global chemical paper grade market pulp shipments in August were 3.272 million tons, up by 6.3% from July and up by 0.4% compared to August 2005, at the delivery rate of 94% of the P.M.C. Inventories at the end of August were 31 days, unchanged from the end of July (Source PPPC).
The U.S. newsprint market remains weak. The consumption of the dailies fell by 7.8% and total shipments to North America by 6.4% as reported by The Newspaper Association of America and PPPC (Pulp and Paper Products Council). The gradual decline of the FOEX benchmark values continue. The 30 lb. benchmark lost 53 cents or 0.08% and settled at US$637.85/ton. The 27.7 lb. benchmark lost 56 cents, also 0.08%, and closed at $680.74/ton.
The European newsprint shipments were strong to the regional market in August with a 6.5% increase reported by CEPIPRINT. Changes in the reported prices were again very limited. Exchange rate changes were also almost negligible. The price index gained 3 cents, or 0.01%, to EUR 519.58/ton.
COATED / UNCOATED
In coated mechanical reels, the market remains softer than in newsprint or uncoated mechanicals. Helped by exports, shipments were up 2% in August, but regional shipments and demand were down. The minuscule weakening of the EUR against non-EMU currencies had hardly any impact on the index. The PIX LWC benchmark gained 8 cents, or 0.01%, and ended at EUR 702.82/ton.
In coated woodfrees, some producers have announced EUR 30-40/ton price increases in Europe, either from the beginning of October or from November. Exports were up in August, but regional shipments and the European demand were down. The PIX Coated WF index retreated by 44 cents, or 0.06%, to EUR 720.09/ton.
In the uncoated woodfree paper grades, total deliveries were up by more than 6% supported both by a large increase in exports and a 3.5% gain in the regional demand. Price increase efforts are bringing in some success. The index gained 5.2 EUR or 0.65%, to EUR 811.33/ton.
The slowing down of the industrial activity is not showing yet in the packaging numbers. Operating rates were high and corrugated box shipments in the U.S. were up by just over 3%. Still, the inventories in the supply chain came down again.
In Asia and Europe, the activity in linerboard and box production has continued to be satisfactory. The price increases announced, typically by 30-40 EUR/ton from September for continental Europe, and 40 EUR/ton, or equivalent, from August for the UK continue to go through gradually.
In the virgin fibre liner, the PIX Kraftliner index gained 75 cents/ton, or 0.15%, and closed at 496.68 EUR/ton.
The PIX White-top Kraftliner benchmark lost 35 cents/ton, or 0.05%, and landed at 673.44 EUR/ton.
The PIX Testliner 2 index rose by 1.75 EUR, or 0.44%, to 397.91 EUR/ton.
The PIX Testliner 3 index gained again slightly less and moved up by 1.2 EUR/ton, or 0.3%, to 365.50 EUR/ton.
The PIX RB Fluting benchmark rose by 86 cents, or 0.25%, to 349.95 EUR/ton.