Market Pulp a Mixed Bag, Uncoated Free Sheet Pushing Price Hike

May 17, 2011 - Market pulp is sending mixed signals, say analysts from Deutsche Bank (DB) who cover the paper and forest products sector.

U.S. NBSK (Northern Bleached Softwood Kraft) pulp list prices in May were flat at $1,020 per metric tonne. In China, DB said that its trade contacts suggest that local NBSK prices this week are down about $70-80/mton from May’s $920-930/mton list price level. The key driver is a $500/mton plunge in spot dissolving pulp (DP) prices in China, DB said.

In Europe, Botnia and Mercer have followed Sodra in announcing a $30/mton price hike for June 1. Strengthening of the Euro has limited margin gains for Euro-based producers.

In the U.S., low inventory levels, 2nd quarter maintenance downtime, and weak USD suggests a positive bias on U.S. softwood prices, DB noted.

Uncoated Free Sheet

All the major producers of UFS (Uncoated Free Sheet) have announced a $60/ton cut-size price hike for early June. However, few observers expect the full $60/ton to stick.

"Our discussions with trade contacts suggest that the cut-size price hike announcement may be more of an attempt to clean up low-end pricing deals," said Mark Wilde, a senior analyst at DB.

Preliminary April shipments were sluggish — down 11.1% month/month and 2.3% year/year. The combination of a weak USD and rising market pulp costs are helping to create a healthy pricing floor, DB added.

SOURCE: Deutsche Bank