Prices Drifting Down for OCC, Market Pulp, Uncoated Free Sheet

Nov. 3, 2011 - Declines in OCC (Old Corrugated Containers) and other wastepaper prices have accelerated “dramatically” in recent weeks, according to analysts at Deutsche Bank (DB).

"The key issue appears to be a sharp pullback in Chinese buying from both North America and Europe," said Mark Wilde, senior analyst at Deutsche Bank covering the paper and forest products sector. "We think November export of OCC to China could be down as much as $50/ton (month/month) and domestic OCC down $20-30/ton (month/month)."

Market Pulp

Pulp price correction is accelerating in key global markets. Last week, Domtar, Weyerhaeuser and Canfor dropped US NBSK by $30/mton to $920/mton for November.

"The key issue is weak Chinese and European demand as well as high pulp inventories," Wilde said. "Canfor recently cut its NBSK to China by $50/mton for October. Last week, Ilim (Russia) dropped its softwood pulp to China by $80/mton for November."

Uncoated Free Sheet (UFS)

UFS demand is weak and prices continue drifting slowly lower. "The Q3 quarter/quarter price gains reported by Domtar and [International Paper] are almost certain to turn negative in Q4," Wilde noted. "October offset estimated prices fell $10/ton to $920-940/ton, (-1.1% year/year). Cut-size estimated prices fell $10/ton to 1,065-1,115/ton (-2.7% y/y).

"Even with recent capacity closures, there appears to be excess UFS supply in the domestic market," Wilde said.

SOURCE: Deutsche Bank