Market Pulp Pricing Under Pressure, U.S. Uncoated Free Sheet Demand Weak

Aug. 30, 2011 - Market Pulp prices could come under further pressure in September, say analysts at Deutsche Bank (DB), adding that July pulp data was weaker-than-expected.

Inventories rose by five days of supply to 39 days. August North America NBSK list price was at $990/mton.

"We've received reports of U.S. spot NBSK deals in mid-$700's," said Mark Wilde, a senior analyst at DB who covers the paper and forest industry sectors. "In China, we’re hearing reports of some pick-up in demand. North American and European producers have not yet announced September prices. But with the latest data, the bias is on the downside.

"In China, Arauco has announced flat prices for September, and Ilim (Russia) has announced a $40/mton increase," Wilde said.

Uncoated Free Sheet (UFS)

According to DB, UFS demand remains weak (July shipments: -4.7% year/year). Inventories are rising: +5.3% month/month. In August, repro-bond estimated prices rose $5-10/ton to $1,085-1,135/ton.

"So far, producers have implemented $35-40/ton out of the $60/ton June 1 price hike," Wilde noted. "Pricing has been aided by supply cuts, lower inventories and favorable trade flows," he added.

"Offset estimated prices fell $10/ton to $935-955/ton. With the August decline, producers have been able to implement only $15/ton of a $40/ton April 1 price hike," Wilde said.

SOURCE: Mark Wilde, Deutsche Bank