FOEX: NBSK pulp prices up in Europe, US, China ahead of announced October price hikes, but BHKP indexes fall in Europe, China despite some improvement in demand; European prices for OCC, ONP/OMG slightly higher, with supply tight relative to orders

HELSINKI , October 1, 2013 (press release) – NBSK pulp Europe – Total market pulp deliveries were up by 2.1% in August and by 2.8% cumulatively, according to PPPC. In BSKP, those numbers were +2.4% in August and +3.3% cumulatively. With delivery-to-capacity ratio at 96% in August and with supply down in September after the closure of the Tofte mill and with the producer inventories in softwood pulp quite low, down at 28 days without and by 27 days with seasonal adjustment taken into account, the BSKP market remains firm. Several producers have separately announced price increases from October 1, typically by 20 USD/ton bringing the “list price” to 900 USD/ton. Euro strengthened last week again, this time by 0.2% against the USD. Our PIX NBSK pulp index moved up by 2.58 dollars, or by 0.30%, and closed at 873.40 USD/ton. When converting this dollar-value into euro, the strengthening of the currency against the USD limited the rise of the benchmark value to 81 cents, or to 0.13%, and the PIX NBSKP index ended at 645.19 EUR/ton.

BHK pulp Europe – Hardwood pulp shipments were up by 1.5% in August, compared to August 2012. The eight-month cumulative total shows a 2.6% gain, according to the PPPC-statistics. Shipments to Europe were clearly down from last year but the purchasing activity is reported to have picked up in China and other East Asia. It also continues strong in North America where local hardwood pulp production is facing wood supply and rising wood cost problems, linked to the exceptionally wet summer months in the US South East. With shipment-to-capacity ratio under 90% and with producer stocks rising (without seasonal adjustment) from 46 to 48 days – but flat at 45 including the seasonal adjustment, hardwood pulp market remains weaker than the softwood pulp market. Producers have announced price increases also in this grade, though. Euro strengthened by 0.2% against the dollar from the previous week. With the strengthened Euro, the PIX BHKP index value in Euro retreated by 4.08 euro, or by 0.71%, and closed at 568.89 EUR/ton. The PIX BHKP index value in USD retreated by 4.20 dollars/ton, or by 0.54%, and settled at 770.11 USD/ton with the price gap between NBSKP and BHKP (euca & birch) now exceeding 100 USD/ton.

BHK pulp China – Market pulp shipments to China exceeded 900 000 tons in August from the PPPC-member countries. The increase over August 2012 was 7.2% which brought the cumulative shipments to a positive comparison for the first time this year with a minor 0.4% advance. If imports from non-PPPC countries and the increased domestic sales were included, these growth percentages would most likely be higher. That would show especially in the BHKP shipments which are up from the 2012 volumes also for the PPPC-countries. Weak paper pricing and the high and still rising volumes of domestic market pulp supply, much of it from semi-integrated suppliers, continue to exert downward pressure on BHKP prices. On the other hand, the Chinese Yuan has continued to gradually strengthen against the dollar which should help to maintain or raise the dollar prices. Prices of BCTMP have risen, narrowing the gap between BHKP and BCTMP. The PIX China BHKP index retreated again, this time by 3.75 USD, or by 0.57%, and closed at 655.19 USD/ton. Yuan strengthened against USD by 0.03%. The conversion of the USD value into Yuan led to a decrease of 24.20 RMB/ton, or of 0.60%, to 4008.82 RMB/ton.

NBSK pulp China – Softwood pulp shipment to China from the PPPC countries were quite strong in August, compared to August 2012. Cumulatively, the BSKP deliveries to China are still below 2012 volumes, though, which is opposite to the shipments to other Asia which are up more in softwood than in hardwood. Softwood pulp inventories in the domestic market are reported to be low. Several producers have announced price increases in BSKP grades from October 1. The price increases have obviously started going through but the jury is still out as to the degree of success of those price increase initiatives. This is partly due to some of the price talks taking place only after the Chinese National Day holidays in the beginning of October. Our PIX China NBSK index headed higher by 7.22 dollars, or by 1.04%, and closed at 702.56 USD/ton. Yuan strengthened by 0.03% against the USD. The conversion of the USD value into Yuan resulted in an increase of 42.85 RMB/ton, or of 1.01%, to 4298.66 RMB/ton.

US NBSK – Even if printing and writing paper shipments in North America remain just over 3% down against 2012, market pulp shipments continue to exceed last year’s volumes by a wide margin. In August, PPPC showed the total market pulp shipments to the North American market up from August 2012 only by 0.2% but the cumulative gain was still as much as 6.7%, or over 300 000 tons. In softwood grade the August shipments were below those of last year but the market remained firm, all the same. Several companies have separately announced price increases in different BSKP grades, typically by 20 USD/ton from October 1, which brings the NBSKP list price to 970 USD/ton for NBSKP. Our PIX US NBSK pulp index gained this time 34 cents, or 0.04%, and closed at 948.38 USD/ton.

Recovered Paper Europe – Demand in China is reported to have been good but not “super-high” through September. Prices of RP, especially OCC, started edging higher again during the second half of the month, even though the paper and board prices remained mostly flat limiting the capability of the recovered paper users to pay much higher prices. Some importers remain vary of the quality inspections and the supply from Europe or US is not always all that readily available either.

In Europe, the situation remained relatively stable all through September. A minor pick-up was seen in the demand and supply was not very strong even if the holiday season ended. Consequently, the supply/demand situation has remained relatively tight and the modest upward trend in the recovered paper pricing in the various European markets has continued. This included again also our two index grades.

The PIX OCC 1.04 dd index moved up by 8 cents, or by 0.07%, and closed at 110.72 EUR/ton. The margins to the related containerboards widened again, this time as follows: to Testliner 2 by 4.19 euro to 356.74 EUR/ton, to Testliner 3 by 74 cents to 333.28 EUR/ton and to RB Fluting by 20 cents to 324.02 EUR/ton.

Our PIX ONP/OMG 1.11 dd index continued to head higher, this time by 22 cents, or by 0.17%, settling at 130.64 EUR/ton. The price differential to the PIX Newsprint index narrowed by 21 cents to 339.38 EUR/ton.

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