FOEX: NBSK pulp prices up in China, US and in US dollars in Europe but down in euros in Europe, while BHKP prices in Europe, China fall in local currencies but rise in US dollars; prices for OCC, ONP/OMG up marginally in Europe, in relatively flat market
October 29, 2013
– NBSK pulp Europe – The release of the PPPC monthly pulp statistics has been delayed until late today Finnish time and cannot thus be commented here. Port stocks in Europe went down, as almost always in September. Europulp reported the port stocks down by 82 000 tons, or by 6.7%, against end August volumes but moderately (by 3.7%) above end September 2012 level. Softwood pulp market has remained firm. Most key softwood pulp producers have separately announced price hikes from November 1 on all key markets. In Europe, the hike is typically 20 USD/ton, bringing the gross contract price for NBSKP to 920 dollars. Our PIX NBSK pulp index moved up by 4.12 dollars, or by 0.47%, and closed at 887.34 USD/ton. When converting this dollar-value into euro, the strengthening of the currency against the USD meant that while clearly up in dollar-terms, the benchmark value fell further back down by 1.37 euro, or by 0.21%, and the PIX NBSKP index in Euro landed at 644.07 EUR/ton.
Europe – Euro-zone’s positive growth persists but the pace remains muted. In fact, Markit Flash Eurozone PMI Composite Output Index, combining data from both manufacturing and services, retreated from 52.2 points in September to 51.5 points in October. While down from the previous month, the index showed expansion now for the fourth consecutive month. Between the two main sectors of the index, services showed a fall whilst manufacturing activity actually increased marginally. The width of the expansion across the Eurozone was reassuring but the fall of the index signals the risk of a loss of the momentum. Additional worries come from the further strengthening of the Euro. The already earlier poor competitiveness of the region in the export markets is only getting worse. Those politicians who have started planning the withdrawal of the stimulation measures should think again. This would be a very good moment to lower the interest rates and thereby activate the badly needed re-weakening of the Euro.
Japanese economy hit a trough a year ago in October-November 2012. Massive stimulation, coupled with the devaluation of the currency, turned the economy around and now, a year later, it certainly appears that PM Abe’s huge gamble is paying off. The long-desired inflation is finally a fact, even if only a small one and relatively one-sided as it has been mainly driven by a rise in the energy prices. Exports are growing relatively fast, in spite of the weakness of the economies of many of the trading partners and the consumer confidence is picking up, too. The growth is still far too modest, however, to help correcting the debt-problem. The share of the national debt of the GDP continues to grow, although now at a slower pace. The sales tax to be introduced in early 2014 will help, but only if the growth is strong enough to compensate the ill-effects of the tax hike. That speed of growth is still a major question mark. Private consumption is likely to pick up before the hike in Q1 2014 but fall shortly thereafter.
In China, the modest acceleration of the economy during Q3 appears to have continued in October. The HSBC China Manufacturing PMI inched further up and recorded 50.9 points in late October after clocking 50.2 points in September. The advance seen was very broadly based. Apart from employment, all other 10 sub-sectors of the index showed positive growth. Manufacturing output grew, new orders increased, both in exports and at home market, and order backlogs lengthened. Both input and output prices moved up, as well, suppliers’ delivery times lengthened and stocks of finished goods grew (good for the index now but not necessarily longer-term). In any case, the momentum is improving and the fears of the speeding up of the growth in Q3 having been of temporary nature have started to dissipate. If the growth persists, the Beijing government can move their focus away from the immediate future outlook, pay less attention to pin-point stimulation measures and concentrate their efforts more on the badly needed structural reforms.
Paper industry – The more numbers over September come out, the more clear it becomes that while September was not a hugely positive month for paper and paperboard industry, it was clearly better than the average of the preceding 8 months. In the US, box shipments were up by 2.9%, helped by one extra shipping day. In printing and writing papers, late 2012 numbers were weak which helps in the 2013/2012 comparisons. North American printing and writing paper shipments were actually up in September by 1.4% against September 2012, while the cumulative nine month total shipments were down by 2.6%. Between the grades, uncoated mechanical was up strongly and positive also cumulatively. The large uncoated freesheet sector showed also modest growth for the month. Both coated grades continued to head lower but much less for the month of September than for the cumulative performance.
In Europe, total newsprint shipments showed a decline but estimated European consumption in September was marginally above September 2012 and both these numbers were much better than the cumulative performance. The regional demand for printing and writing papers, excluding newsprint, was down by 1.7% against September 2012 but much less than the cumulative drop of 5.4%. Total shipments behaved in a similar manner, down by 2.6% for the month against the cumulative fall of 5.3%. The impact of the Euro-strengthening shows in the trade data. Printing and writing paper exports outside the region were down by 3.6% in September while imports grew again, this time by 5.9%.