August world pulp producer stocks rise two days, to 41 days, but month-over-month shipments increase by 5.1%; shipment-to-capacity rate is 85%

Diane Keaton

LOS ANGELES , September 22, 2011 (Forestweb) – Forestweb Editor’s Note: This report has been expanded from the originally posted version.

In August, World 20 chemical market pulp producer stocks increased by two days, to 41 days, according to statistics released today by the Pulp and Paper Products Council (PPPC).

Producers’ stocks of both bleached softwood kraft pulp (BSKP) and bleached hardwood kraft pulp (BSKP) showed two-day increases, to 34 days and 50 days, respectively (standard calculation).

In July, the production-to-shipment rate was 93%, while in August 2010, it was 94%. For the first eight months of 2010, it was 93%. Figures for August of this year and for the first eight months of this year are not yet available.

August 2011 shipments totaled 3.411 million tonnes and the shipment-to-capacity rate was 85% (the July 2011 rate was 81% and in August 2010, it was 83%). August 2011 deliveries were 5.1% higher than those of July and 7.4% ahead of those of August 2010.

Year-to-date shipments of all grades of 27.898 million tonnes, on an 89% shipment-to-capacity rate, were 4.6% higher than in the first eight months of 2010, when the rate was 90%. BSKP was 6.2% higher, at 14.235 million tonnes, on an 87% shipment-to-capacity (operating rate), and BHKP, at 12.703 million tonnes, was ahead by 2.4%; the operating rate was just 84%. In July, the BSKP operating rate was also 87%, whereas for BHKP, it was a low 76%.

Year-over-year shipments fell to the major regions, except to China, up 91.8%, to 771,000 tonnes, and to Japan, up 18.2%, to 188,000 tonnes. (As for the August 2011 large increase in shipments to China, the PPPC noted that the August 2010 number was at a three-year low, “making for a very easy comparison.”)

The year-over-year declines included to North America (629,000 tonnes, -2.9%), Western Europe (1.095 million tonnes, -8.7%; the PPPC said this was to the lowest level in more than two years), Eastern Europe (66,000 tonnes, -10.8%), Latin America (245,000 tonnes, -2.4%), and Other Asia/Africa (385,000 tonnes, -6.6%). Shipments to Oceania were unchanged, at 31,000 tonnes.

Year-to-date shipments to North America were 4.890 million tonnes, down 3.9%, and to Western Europe they were 9.742 million tonnes, down 0.7%. But to China, they rose by 36.4%, to 5.620 million tonnes.

Other regions were as follows: to Japan, 1.387 million tonnes, up 4.6%, to Latin America, 2.003 million tonnes, down 2.7%, to Eastern Europe, 589,000 tonnes, down 1.0%, to Other Asia/Africa, 3.457 million tonnes, up 0.4%, to Oceania, 209,000 tonnes, up 3.9%.

Analyst comment. TD Securities paper and forest products industry analyst Sean Steuart said in a research note today that August statistics were “slightly negative.” He said shipment growth on both year-over-year and month-over month bases “is encouraging, but in our mind, this is more than offset by the above-normal increase in mill inventories.”

Steuart described the 41 days of mill inventories as “well above the long term average of 32 days” and he said the 34 days of BSKP stocks compared to an average of 29 days and the 50 days of BHKP stocks compared to 37 days.

Shipments by grade. Shipments of BSKP totaled 1.730 million tonnes in August, up by 8.0% year-over-year and by 10.0% month-over month. For BHKP, they totaled 1.569 million tonnes, higher by 7.0% from a year ago by 11.4% than in July. The PPPC said that although this growth was fairly evenly split between the two sectors, virtually all of the gains were in sales to China, noting that most other major markets except for Japan posted declines.

Northern bleached softwood kraft (NBSK) shipments totaled 991,000 tonnes, growing by 6.3% year-over-year and by 10.0% month-over month. For southern bleached softwood kraft (SBSK), they reached 504,000 tonnes, up 2.4% and 1.8%, respectively, and for bleached radiata kraft pulp (BRKP) they totaled 235,000 tonnes, up 32.0% year-over-year, but down 11.7% month-over month. The respective operating rates were 85%, 92%, and 84%.

On the hardwood pulp side, bleached eucalyptus kraft pulp (BEKP) deliveries totaled 1.153 million tonnes, increasing by 11.5% year-over- year and by 13.2% month-over-month. Northern bleached hardwood kraft (NBHK) shipments totaled 270,000 tonnes, down 3.9% year-over-year but 5.1% higher month-over month. For southern bleached hardwood kraft (SBHK), the figure of 146,000 tonnes fell by 4.6% from August 2010 but grew by 10.6% over July 2011. The respective operating rates were 85%, 82%, and 84%.

Unbleached kraft pulp (UKP) shipments of 98,000 tonnes increased by 4.3% from a year ago and by 3.2% from a month ago.

Sulfite pulp shipments of 14,000 tonnes were 1,000 tonnes higher than August 2010 and 2,000 tonnes lower than in July 2011.

For the first eight months of 2011, the shipments were 8.325 million tonnes of NBSK, up 5.9%, 3.965 million tonnes of SBSK, up 3.2%, 1.944 million tonnes of BRKP, up 14.3%, 9.220 million tonnes of BEKP, up 2.4%, 2.278 million tonnes of NBHK, up 3.8%, 1.205 million tonnes of SBHK (unchanged), 850,000 tonnes of UKP, up 12.9%, and 110,000 tonnes of sulfite pulp, rising by 0.1%.

Days of supply. The 41 days of supply (standard calculation) for August compared to 39 days in July and 34 days in both June 2011 and August 2010. For BSKP, the 34 days compared to 32 days in July and 28 days in June 2011 and August 2010. For BHKP, the 50 days compared to 48 days in July, 41 days in June, and 40 days in August 2010.

Looking at the seasonally adjusted calculation, the 40 days overall compared to 39 days in July, 36 days in June, and 30 days in August 2010. For BSKP, it was 33 days in August 2011, 32 days in July, 30 days in June, and 26 days in August 2010. For BHKP, it was 48 days in August 2011 and July 2011, 44 days in June 2011, and 36 days in August 2010.

Raw data. In the previous 10 years, August stocks averaged 3.522 million tonnes, increasing by an average 101,400 tonnes (the five-year average was an increase of 144,600 tonnes). (This includes the PPPC’s revised August 2010 figure today of 3.679 million tonnes).

Analyst Sean Steuart estimated the August inventories grew by 201,000 tonnes.

The PPPC said today that July 2011 producers’ inventories totaled 3.237 million tonnes, up 486,000 tonnes from June. In the previous 10 years, July stocks totaled 3.450 million tonnes, increasing by an average 218,400 tonnes (five-year average increase: 230,200 tonnes).

In September in the previous 10 years, stocks averaged 3.397 million tonnes, down an average 125,900 tonnes (down 69,600 tonnes on the average over the five-year period).

World 20. The world pulp figures are sometimes referred to as the "World 20," representing 80% of world capacity and including the stocks of Argentina, Austria, Belgium, Brazil, Canada, Chile, Finland, France, Germany, Japan, Morocco, New Zealand, Norway, South Africa, South Korea, Spain, Swaziland, Sweden, Uruguay, and the U.S.

The monthly world figures do not represent 100% of world capacity because they do not include stocks for the major producing countries of Portugal, Indonesia, and Russia, or those for Thailand, Taiwan, Switzerland, and the Czech Republic.

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