Market Pulp Prices Flat in November, Uncoated Free Sheet Under Pressure

Nov. 17, 2010 - Market pulp list prices remained flat in November, but the underlying market continues trending lower, according to analysts at Deutsche Bank who cover the Paper & Forest Products sector.

Softwood markets remain relatively snug, but could weaken in the seasonally slower December/January period.

Hardwood markets appear weaker than softwood. BHK list prices in Asia were reportedly down $20-50/metric ton in October, Deutsche Bank said.

Late last week, Chilean producer CMPC announced a $50/mton decline on its Asian BEK prices, effective Dec 1.

With news of additional supply coming on-board in the next 2-3 months (Kertas Nusantara, Indonesia = 525,000 m/tons, APRIL's third line at Kerinci, Indonesia and additional capacity of about 200,000/mtons at Rizhao), prices are apt to come under some additional pressure during the winter months, Deutsche Bank noted.

Uncoated Free Sheet
UFS shipments were disappointingly weak in October. Preliminary October data shows that shipments were -7.8% y/y — weakest y/y comp of the year (September was -6.8% y/y).

“Considering that October 2009 was still a relatively easy comp (-8.9% y/y), it's hard to put a cheerful face on these numbers,” said Mark Wilde, Senior Analyst. “Prices are coming under increasing pressure. We are hearing reports of producers offering increased discounts on list prices. Cut-size pricing is reportedly down as much as $20/ton in October and offset roll price is down about $5/ton,” he said.

“It's not just the U.S. On a trip through Europe last week, we heard reports of pricing pressure in the European UFS market,” Wilde added.

SOURCE: Deutsche Bank