Uncoated Free Sheet Demand Sluggish, Market Pulp Supply Remains Tight

May 3, 2011 - Domtar last week announced a $60/ton price hike on cut-size papers, effective June 1, despite evidence of sluggish demand and an uneven pricing, reported analysts at Deutsche Bank (DB) who cover the paper and forest products sector.

According to DB's weekly report, Dr. Paper's Pulse on Pricing, Domtar, International Paper and Boise have all reported small ($7-15/ton) quarter/quarter price declines during Q1. Producers implemented partial increases on offset ($25/ton) and converting grades ($20/ton) in April, out of the $40/ton hike announced. The combination of a weak US dollar and rising market pulp costs are helping to create a healthy pricing floor, DB explained.

Market Pulp

U.S. NBSK prices are expected to be flat in May at $1,020/metric ton after rising $60/mton in the last two months, DB said.

"With limited new supply coming into the global market over the next 18 months, softwood inventories at just 24 days of supply, US mills taking maintenance downtime and the US dollar continuing its slide, the bias on softwood pulp prices appears to the upside," said Mark Wilde, a senior analyst at DB. "Local NBSK prices in China, however, are showing signs of weakness," he said.

DB noted that several producers have announced new dissolving pulp (DP) projects in an attempt to take advantage of a sharp increase in viscose DP prices in China.

SOURCE: Deutsche Bank

Source: Deutsche Bank, Pulp & Paper Week RISI, Random Lengths, CMAI Global