September 3, 2013
NBSK pulp Europe – The PPPC numbers came out relatively strong as far as shipments were concerned but even higher production volumes lifted producer inventories higher for BHKP and for market pulp total. Total market pulp shipments were up in July by 6.9% (according to PPPC) and now cumulatively by 2.9%. In BSKP, the same numbers were relatively even better, up in July by 11.6% against July 2012 and cumulatively the gain came to 3.4% over the first 7 months. Producer inventories for market pulp total were up by 2 days without seasonal adjustment and flat with the adjustment. Softwood pulp market remains firm. Euro weakened last week by 0.9% against the USD. After removing the top and bottom 10%, our PIX NBSK pulp index slipped marginally lower, by 10 cents, or by 0.01%, and closed at 858.38 USD/ton. When converting into euro, the weakening of the currency by 0.9% against the USD sent the benchmark up by 5.75 euro, or by 0.89%, and the PIX NBSKP index closed at 648.57 EUR/ton.
BHK pulp Europe – Hardwood market pulp shipments were up by 2.4% in July and cumulatively by 2.7% against 2012. BHKP shipments to the European market turned up but were still down slightly cumulatively. In Asia, low paper consumption released market pulp from producers and the high shipments from non-PPPC sources hurt the shipment volumes from producing countries reporting the volumes to PPPC. Euro weakened by 0.9% against the dollar from the previous week. Supported by the euro weakness, the PIX BHKP index value in euro still retreated by 3.29 EUR, or by 0.56%, and closed at 589.08 EUR/ton. The PIX BHKP index value in USD plunged by 11.46 USD/ton, or by 1.45%, and settled at 779.65 USD/ton.
BHK pulp China – Total pulp shipments to China were up by 5.4% in July, against July 2012, according to PPPC. Obviously, the active sales by local producers, not reported by PPPC, played a significant role in the decline of hardwood pulp shipments to China from the Western sources. With the weakened import volumes and with regional pulp spot volumes available at lower prices, the BHKP market in China continued to weaken. The PIX China BHKP index retreated again, this time by 1.62 USD/ton, or by 0.25%, and closed at 659.05 USD/ton. Yuan strengthened against USD by 0.1%. The conversion of the USD value into Yuan led to a decrease of 12.18 RMB/ton, or of 0.30%, to 4032.43 RMB/ton.
NBSK pulp China – While hardwood pulp shipments from PPPC member countries to China fell, the softwood pulp deliveries moved up by more than 17% in July, against July 2012. Production stoppage at Bratsk was probably one driver for higher shipments from PPPC-countries. The firming up of the BSKP-market and subsequent anticipation of price increases could well have been another. Shipment-to-capacity ratio of market BSKP was up at 96%, nine percentage points higher than in July 2012. Our PIX China NBSK index headed higher by 7.37 dollars, or by 1.09%, and closed at 683.88 USD/ton. Yuan strengthened by 0.1% against the USD. The conversion of the USD value into Yuan resulted in an increase of 42.77 RMB/ton, or of 1.03%, to 4184.35 RMB/ton.
US NBSK – Market pulp shipments to the North American region were quite good again in July. For the total chemical market pulp, July shipments were up by 50 000 tons, or by 8.2% against July 2012. This brought the cumulative 7-month gain to 7.6%. Pulp producers have announced price increases to other regions but not to the North American destinations, judging, quite rightly that the recent price differential to other markets was wider than what we’ve been accustomed with in the past. After removing the top and bottom 10% of the received quotes, our PIX US NBSK pulp index remained unchanged at 949.29 USD/ton.
Recovered Paper Europe – Chinese recovered paper demand improved gradually through August although the demand growth is still slower than on the average over the past 10-12 years. Tighter quality controls play a role at least as far as the imported volumes are concerned. Prices have been creeping up as well. In Europe, the supply/demand balance has tightened in August with the demand beginning to pick up and with the summer lull still affecting the collection volumes. This week, both of our indexes headed higher.
The PIX OCC 1.04 dd index gained 27 cents, or 0.25%, closing at 110.30 EUR/ton. The margins to the related containerboards widened as follows: to Testliner 2 by 2 cents to 346.63 EUR/ton, to Testliner 3 by 34 cents to 327.57 EUR/ton and to RB Fluting by 33 cents to 318.99 EUR/ton.
Our PIX ONP/OMG 1.11 dd index continued to head higher, this time by 71 cents, or by 0.56%, settling at 128.30 EUR/ton. The price differential to the PIX Newsprint index widened by 2.72 euro to 341.17 EUR/ton.
General Economy – US: The news on the American economy is mixed. The worrisome piece of news is that the consumer sentiment reading retreated, as expected by many economists, from the encouraging 85.1 in July to 82.1 in August with both current conditions and future expectations slipping. High income persons interviewed were optimistic, especially with more favourable income expectations. The lower income households were clearly more pessimistic about their future. That helped to drive the gauge of consumer expectations down to 73.7 from 76.5. The good news is that the manufacturing activity continued to expand. The Markit Flash U.S. Manufacturing PMI showed the August index slightly up from July at 53.9.
Europe – There is more and more data coming out over August which helps to convince the markets that the recession in the Euro-zone is over. The final Eurozone Manufacturing PMI, by Markit, rose from 50.3 points in July to 51.4 points in August, the highest level seen since more than two years (June 2011). The growth is still quite modest and has not led to active staffing, in fact jobs continue to be lost. Still, the month-on-month rise of the index was the second highest in the whole history of the time-series. In the retail sector, the Euro-zone index climbed up in August for the first time in nearly two years. Markit’s retail PMI reached a 28-month high at 50.3. Germany was here strong as well and France showed a modest rise whilst e.g. Italy posted an on-going sharp decline.
Japan continues to grow. After a weaker showing in July, the manufacturing data for the country was again quite positive in August. The Markit/JMMA Japan Manufacturing PMI rose comfortably from 50.7 points in July to 52.2 points in August. Actual manufacturing output and the volume of new domestic orders rose at a good rate. New export orders remained weak, however, with a marginal drop in August. The upcoming months will hopefully confirm the continuation of this recent growth trend, quite likely if the export sector were finally to take off as well. So far, the continued weakness of the yen has not been able to overcome the contractions seen in the foreign demand.
In China, the final August manufacturing PMI (by HSBC, compiled by Markit) confirmed that the sector had returned to growth, at least temporarily as the final index came out the same as the preliminary flash index earlier, i.e. at 50.1 points, clearly higher than the July index at 47.7. The purchasing managers’ index (PMI) by China’s National Bureau of Statistics showed the level at 51.0, the highest level seen in 16 months. The good manufacturing data, coupled with more positive news on US and European economies are also likely to increase the consumer confidence levels and thereby activate the domestic economy alongside the growing manufacturing activity for export purposes. Both input and output prices were up, even if only rather marginally.
Paper industry – With the backdrop of weak 2nd half of 2012, the comparisons of this year’s performance against 2012 have already started to look a little bit better, or rather, less weak than so far. This development is expected to continue as the year continues to draw towards its close. Some examples of this development are: European graphic paper (including newsprint) demand was down in July 4.7% against 2012 but in January-June, the drop was 6.1%. In North America, the printing and writing paper demand was up in July by 2.8% whilst down by 3.2% over the first 6 months. In newsprint, the corresponding numbers were July -7.6%, January-June -9.5%. US containerboard production was up in July by 5.3%, but during January-June less than that, or by 1.8%. Finally, US boxboard production; in July up by 1.6%, but in January-June still down by 1.8%.
The more promising economic growth outlook brings with it some encouraging, even if not yet truly good, data also from the paper industry sector. Furthermore, in printing and writing papers the production capacities are lower in most grades in Europe and in North America. This means an improvement thus also in the capacity utilization or shipment-to-capacity ratios.
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