North American Softwood Pulp Markets Weak, Containerboard Stable

Jan. 19, 2012 - North American softwood pulp markets remain weak and hardwood pulp markets appear to be close to a bottom — January prices were flat month/month, say analysts at Deutsche Bank (DB).

U.S. NBSK (Northern Bleached Softwood Kraft) pulp fell $20/mton to $870/mton in January. Spot prices at $600-650/mton (-$25/mton month/month in January) remain well below list price levels. At current spot levels, prices appear to be at or below mill cash-cost levels.

North American fluff pulp prices fell about $35/mton month/month in January.

According to DB, domestic (U.S.) containerboard prices remain stable and demand appears modestly positive. Old Corrugated Containers (OCC) costs have stabilized at a relatively high level and have begun increasing. Export prices appear to be bottoming.

"Although we’re still forecasting a $40-45/ton y/y drop in domestic containerboard prices in FY12, recent data points make us a bit more positive on containerboard prices for FY12," said Mark Wilde, senior analyst at DB who covers the paper and forest products sector. "If the trend continues, we may need to review our estimates not only for domestic prices not falling, but also for any potential of a price hike attempt."

Old Corrugated Containers
OCC prices appear to have stabilized and are beginning to move higher. January domestic OCC was up $2/ton month/month to $123/ton. Export OCC is up $15-20/ton month/month to $170-180/ton FAS to China/Asia.

"We view this as positive for containerboard producers as high OCC prices translate into a higher global containerboard costs," Wilde noted.

SOURCE: Deutsche Bank