Rottneros CEO Says Demand, Pricing Strengthening for NBSK Market Pulp

Oct. 22, 2013 - Rottneros' recently elected (July 1) CEO and President Carl-Johan Jonsson in commenting on the company's performance during the first nine months of 2013 said that global demand for NBSK pulp continues to grow and will contnue to bolster improved pricing.

"The global pulp market is continuing to improve this autumn. NBSK deliveries to China increased further in September, and demand for NBSK from Europe/North America continued to be good," — Carl-Johan Jonsson, CEO and President, Rottneros.

"The global pulp market is continuing to improve this autumn. NBSK deliveries to China increased further in September, and demand for NBSK from Europe/North America continued to be good," Jonsson said. "The supply of pulp for the remaining of the year will be affected by many producers having a number of maintenance shutdowns.

"There is expected to be a further rise in demand from, among others, tissue paper producers whose utilisation of production capacity is already high, as several of them will start-up new tissue paper machines during the autumn. There is a corresponding market situation for CTMP, with stronger demand during the autumn following a period characterised by uncertainty.

"Taken overall, there appears to be a favourable outlook for the long-fibre pulp market for the rest of the autumn.

"There is currently (mid-October) a clear upward price trend for NSBK in many markets. Several producers have announced price increases from 1 October, taking us to a price level of USD 900 per tonne in Europe.

"The continued strength of the SEK and the lower production availability at Vallvik have had a negative impact on our result. We are pleased to announce that the groundwood line at Rottneros Mill will now return to full production during the autumn following a decision taken by the Board of Directors to resume full operation.

"At Rottneros we have this autumn initiated an extensive thoroughgoing change process. Our areas of focus include improving availability of production and the utilisation of capacity at both mills, together with the optimisation of internal processes, such as logistics, purchasing, administration and use of raw materials. In addition, we are increasing our activities to further improve safety for our employees.

"All levels of the company will be involved in order to ensure a consensus of the prevailing situation, our strategic objectives and how to achieve the defined objectives. The main prerequisite for future success is in fact to establish a common understanding on all matters. Of course it will be necessary to take action. We will reshape our business culture and implement the responses required to ensure the sustainable, long-term profitability of Rottneros, in which we all can take pride together. Let us consider the challenges we face as our opportunities.

"It is from now and onward that we will proceed forward!"

THE PULP MARKET

Rottneros markets and products
The paper pulp market continued to have a good balance between supply and demand during the third quarter of 2013.

Pulp producers implemented price increases of approximately USD 15 per tonne during the third quarter of the year up to approximately USD 875 per tonne at the end of September. The PIX price for bleached sulphate pulp was USD 810 per tonne at the start of the year. This price rose by over USD 65 per tonne during the first nine months of the year, while the price of bleached short-fibre sulphate pulp fell by USD 5 per tonne. Producers have announced further price increases for October. The price of bleached long-fibre sulphate pulp after the first three quarters of the year was approximately USD 110 per tonne higher than the prices for the same period of 2012.

The price variance for bleached long-fibre sulphate pulp compared with bleached short-fibre sulphate pulp increased by approximately USD 60 per tonne during the third quarter. This variance was approximately USD 35 per tonne at the beginning of 2013, approximately USD 40 per tonne after the second quarter and approximately USD 105 per tonne at the end of the third quarter of 2013. This means that the variance in the PIX price has reverted to previous historical levels.

The PIX price for bleached short-fibre sulphate pulp fell by approximately USD 45 per tonne in the third quarter, while the price for bleached long-fibre sulphate pulp rose by approximately USD 15 per tonne.

Statistics for bleached chemical market pulp for the total global market showed that deliveries for January to August 2013 amounted to SEK 28.3 (27.6) million tonnes, which was 2.6% higher than the same period in 2012, despite an extra shipping date in 2012. Global delivery capacity utilisation for bleached chemical pulp was 91% (91%) for the period January to August 2013. Production capacity utilisation for the period has been estimated at 95% (92%). Global producer stocks of bleached chemical pulp amounted to approximately 4.3 (4.1) million tonnes at the end of August.

Long-fibre chemical pulp (NBSK) produced at Vallvik Mill
There is a good balance in the market for bleached long-fibre chemical pulp, despite an increase in stock of approximately 25,000 tonnes up to the end of August. Producer stock levels of long-fibre chemical pulp are low, corresponding to 28 days' production, which is one day lower than at the beginning of the year. Deliveries of bleached long-fibre chemical pulp amounted to 15.03 (14.55) million tonnes for January to August 2013, which was 3.3% higher than the same period of 2012. Delivery capacity utilisation for the period January to August 2013 amounted to 95% (94%) and production capacity utilisation to approximately 95% (92%).

Mechanical pulp and CTMP produced at Rottneros Mill
The price of CTMP in the Western European market amounted to approximately USD 590-600 per tonne at the beginning of the year. The price was USD 30 higher per tonne at the end of the third quarter, with some variations depending on market and quality. Deliveries fell by two per cent for the period January to August 2013 compared with the same period of 2012. Deliveries amounted to 1.8 million tonnes for January to August 2013. Delivery capacity utilisation for the period January to August 2013 was 91% (95%) and production capacity utilisation was 90% (95%).

PRODUCTION AND DELIVERIES

The Group's pulp mills at Rottneros and Vallvik have a combined annual production capacity of almost 400,000 tonnes. Production amounted to 254,500 (244,200) tonnes for January to September 2013. Rottneros Mill's production of CTMP increased by 900 tonnes, and the mill's production of groundwood pulp is 5,200 tonnes higher this year compared with last year, when significant market-related production limitations were made.

Deliveries amounted to 255,900 (252,100) tonnes for 2013. Vallvik Millís deliveries of sulphate pulp remained the same compared with the same period of the previous year. Deliveries of groundwood pulp from Rottneros Mill increased by 3,400 tonnes compared with the same period of 2012 as a consequence of a stronger market.

Rottneros produces market pulp and has an annual production capacity of just under 400,000 tonnes produced at two mills in Sweden. For additional information, visit www.rottneros.com

SOURCE: Rottneros