Paper Market in Europe Outpaces U.S., Capacity Controlled
Oct. 5, 2006 (FOEX) - Market conditions for the European paper industry continue to be better than those in the U.S. In Europe, recent capacity reductions, both in light weight coated (LWC) and coated woodfree (CWF), are gradually improving the supply/demand ratios. In other grades in the European market, current demand is satisfactory and the year-to-date shipment growth exceeds the general economic growth.
In the U.S., containerboard demand remains brisk and the uncoated free sheet market is reasonable, even if less bullish than a few months ago. In other grades, consumption growth numbers are very small, totally flat or outright negative. However, supply has remained well under control.
In the North American pulp market, the supply/demand situation remains tight even if the demand is not presently growing. The price increases, typically by US$20/ton to $770/ton from September, are very near the goal. The range was still from $750 to $770 with a large majority at $770. The FOEX PIX index moved up by 70 cents, or 0.09%, and closed at $767.95/ton.
In the European pulp markets, the typical upbeat in September/October, following the seasonal high in paper production, has not been as clear this year as often before. Still, the statistics show that the fundamentals are very good and the market conditions continue to prevail. Price increases, announced either from September or from October continue to creep through during the last week of September. The PIX NBSK pulp benchmark prices moved up by US $1.3/ton, or 0.18%, to $713.15/ton. The USD strengthened last week by 0.8% against Euro and the NBSK index value in Euro closed at 560.96 EUR/ton, up by 5.5 EUR/ton, or by 1.0%.
BHK pulp shipment increases have moved up with the gradually higher production numbers. The price gap to BSK has gradually widened through the year. Euro weakened by 0.8% against the USD over last week. The stronger USD helped push the BHK benchmark up in Euro-terms. The index closed at 519.15 EUR/ton, up by 4.2 EUR/ton, or 0.8%. After converting the higher Euro-prices into the strengthened USD, the index remained flat at US$660.00/ton.
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).
Utipulp, European pulp consumer August 2006 figures: inventory 1.021 million tons, in 26 days, down from July figure by 14,000 tons or -1.3%, and down by -10.9% from August 2005. Consumption in August was 1.053 million tons, down by 170,000 tons or -13.9% from July, and down by -1.4% from August 2005.
The U.S. newsprint market continues to clearly show negative demand numbers, month after month. Stora Enso has announced the re-start of the Port Hawkesbury facility in Canada. Production will start with SC paper. The 30lb newsprint benchmark lost 37 cents or 0.06% and settled at $637.48/ton. The 27.7lb benchmark lost 40 cents, also 0.06%, and closed at $680.34/ton.
The European newsprint shipments statistics over the month of August were healthy. Euro strengthened by about 0.4% against the basket of non-EMU currencies. This brought a downside pressure to the otherwise virtually flat price quotes. The index lost 48 cents, or 0.09%, and closed at 519.10 EUR/ton.
COATED / UNCOATED
In coated mechanical reels, the market appears to continue relatively softer than one or two months ago. The approximately 0.4% strengthening of the EUR against non-EMU currencies gave an additional downward kick to the index. The PIX LWC benchmark dropped by 2.41 EUR/ton, or 0.34%, and ended at 700.41 EUR/ton.
In coated woodfrees, the latest price increase efforts in Europe are at the first threshold of becoming effective. The strengthening of the EUR accentuated the downward thrust on the PIX Ctd WF index. The benchmark retreated by 1.61 EUR/ton, or 0.22%, to 718.48 EUR/ton.
In the uncoated woodfree paper grades, the PIX A4 B-copy benchmark jumped notably—by more than 5 EUR—last Tuesday, as mostly positive price changes had come in. With some impact of the strengthening EUR against non-EMU currencies, the index now lost 0.87 EUR/ton or 0.11%, to 810.46 EUR/ton.
The U.S. packaging market remains firm. Operating rates were high in August and corrugated box shipments were up. Despite the higher operating rates, inventories in the supply chain stayed at a low level.
In Europe, the containerboard market is also tight, especially for the recycled fiber-based grades. The announced price increases continue to be gradually implemented. The currency movements had a small negative impact on FOEX's indexes this week as the basket of non-EMU currencies weakened by about 0.4% against the Euro.
In the virgin fiber liner, the PIX Kraftliner index for brown Kraftliner climbed by 3.42 EUR/ton, or 0.7%. The index closed at 500.10 EUR/ton.
The PIX White-top Kraftliner index moved up by 1.15 EUR/ton, or 0.17%, closing at 674.59 EUR/ton.
In the recycled fiber-based packaging grades, the PIX Testliner 2 index gained by 3.12 EUR/ton, or 0.8%, to 401.03 EUR/ton. The PIX Testliner 3 index moved up by 3.01 EUR/ton, or 0.8%, to 368.51 EUR/ton. The PIX RB Fluting benchmark went up by 2.66 EUR/ton, or 0.76%, to 352.61 EUR/ton.