Softwood Pulp Prices Under Pressure, Containerboard Flat, OCC Stabilizing

Dec. 14, 2011 - Softwood pulp prices remain under pressure, say analysts at Deutsche Bank (DB). In hardwood grades, market tone appears to have improved a bit after a sharp fall-off in prices over the past 5 months.

"US NBSK prices are set to fall $30/mton in December to $890/mton," said Mark Wilde, senior analyst at DB who covers the paper and forest products sector. "Spot prices are much lower — in the $600-650/mton range.

"In BEK (Bleached Eucalyptus Kraft), Fibria recently announced a price increase in Europe and China. Spot hardwood prices are in the $500-550/mton range," Wilde said.

DB estimates that North American NBSK will be down about $75/mton in the fourth quarter compared to the same period in 2010, and down about $175/mton year/year in FY12.


"November containerboard prices were flat at $635-645/ton," Wilde said. "October box data was a bit better than expected and recent ISM/retail data suggest that domestic demand is relatively flat to modestly positive.

"While DB is forecasting a drop of $5/ton quarter/quarter in 4Q, and $40-45/ton year/year in 2012, we've become a bit more optimistic about December published prices. We still haven't seen much evidence of domestic erosion," Wilde noted

Old Corrugated Containers (OCC)

Domestic OCC was down $6/ton to $121/ton in December. "We think OCC prices have started to stabilize and see limited downside from current levels," Wilde said.

"Over in China, US export OCC is showing signs of a modest pick-up — about +$10/ton in the last two weeks. Even so, we donít expect a sharp snapback in OCC," he said.

SOURCE: Deutsche Bank, Mark Wilde