Markets in Brief: Pulp, Containerboard, Kraft Paper

Sept. 28, 2011 - Market Pulp prices are likely to face additional pressure in October as pulp fundamentals remain weak, says Mark Wilde, senior analyst at Deutsch Bank (DB) who covers the paper and forest products sector.

According to Wilde, inventories rose 2 days of supply to 41 days (softwood +2 days to 34; and hardwood +2 days to 50 days) in August. Shipments rose 7.3% year/year, largely due to a 92% surge in Chinese shipments. Other key regions were weak: NA -2.8% y/y, Western Europe -8.7% y/y and Latin America -2.4% y/y.

"Spot prices are weak and well below reported list prices," he said.

"September linerboard estimated prices are reportedly flat at $635-645/ton. However, slowing US economy and uncertainty in other key regions suggest Q4 apt to be tougher for containerboard producers," Wilde said.

"Export prices have begun slipping. In Southern Europe, prices are down about EUR 20 per ton in the last one month. In China, prices are down about $20/ton. We've also received some reports of discounting on domestic box prices, but most contacts are reporting relatively stable pricing," Wilde added.

Kraft Paper
The Kraft paper market remains the industry's best market, Wilde pointed out. "The $50/ton price hike on 'natural' multiwall and other grades appear to have been pushed back to October. 'Extensible' multiwall estimated prices were flat at $1,150-1,170/ton, +10.5% y/y in September. Key drivers are strong export demand & limited supply," he said.

SOURCE: Mark Wilde, Deutsche Bank