FOEX: Newsprint prices unchanged in US, up slightly in Europe as euro weakens; European prices decline for LWC, A4 B-copy paper but increase for coated woodfree benchmark, amid capacity shifts, mill downtime, stalled price talks
Debra Garcia
HELSINKI
,
January 21, 2014
(press release)
–
Newsprint – While some newsprint deals were made for early 2014 already before the turn of the year in some of the countries, the talks have slowed down or stalled in January and the outcome remains unclear still now in late January. The first 11 months of year 2013 showed European newsprint demand down by over 6% and exports outside the region weakened by 15%, the drop in total shipments was over 7%. Demand continues to fall but so does the production capacity and newsprint capacity utilization rate has, in spite of the estimated 6% drop in demand in 2013, been higher in late 2013 than in most other graphic paper grades. Euro weakened by 0.3% against the weighted basket of non-EMU currencies which gave some upward momentum on the benchmark. The PIX Newsprint index inched up by 20 cents, or by 0.04%, and closed at 476.82 EUR/ton.
LWC – In coated mechanical, the operating rates have hovered at around 85-86% in Europe and at about 90% in North America in 2013 and the consumption drop in Europe approaches 8% for the year. This is not a favourable setting for trying to raise prices, which the cost and profitability numbers would, on the other hand, see essential. Two units, Perlen’s PM at Luzern and Stora Enso’s at Corbehem are back in operation, the former since late December 2013 after major downtime due to a fire and the latter since little more than a week ago. The approximately 0.3% weakening of the Euro against the weighted basket of non-EMU currencies gave an upward push to the benchmark. The PIX LWC index retreated, however, by 41 cents, or by 0.06%, and settled at 660.43 EUR/ton.
Coated woodfree – The operating rates in coated woodfrees have been at slightly under 90% in North America and marginally above 85% in Western Europe in 2013. In Europe, the demand is down by more than 7% against 2012. In early 2014, the order books are “acceptable”, taking into account the seasonal slow-down. Price talks are not over and order backlogs provide still volumes at late 2013 price levels. Pulp price increases in BSKP and the slightly weakened, while still strong Euro, add to the paper producers’ cost pressures. The 0.3% weakening of the Euro against the non-EMU currencies helped in pushing the index higher. The PIX Coated woodfree index gained 2.32 EUR, or 0.35%, and reached 668.30 EUR/ton.
Uncoated woodfree – In this grade, there is a wide difference in operating rates between North America and Europe. In the former, operating rates exceeded 90% over the first 11 months of 2013 and with major closures decided over the first half of 2014, the rates are expected to go further up. In Europe, the operating rate averaged only 82% over the first 11 months and with the Alizay re-start, the production capacity actually increased in late 2013. In January, Burgo’s Avezzano mill has switched from coated to uncoated woodfree production. Inevitably, the competition is intense. Rising exports help the total shipments a bit as will, at least indirectly, the recent and future capacity reductions in the US. The 0.3% weakening of the Euro against the basket of non-EMU currencies put some upward impact on the benchmark. But, the PIX A4 B-copy index drifted down, however, by 1.48 euro, or by 0.18%, and closed at 838.65 EUR/ton.
US Newsprint – Demand for newsprint continues to fall rapidly in North America, as it does throughout the industrialized world. Capacity closures and conversions to either totally different grades, such as packaging products or to improved news or other speciality, used e.g. in inserts helps the operating rate in standard newsprint. Including the latest conversion decision at SP Fiber, conversions away from newsprint to packaging already amount to over 0.5 million tons over the past 12 months. And, at least one more conversion is expected to be seen within this year. Export markets are also suffering, due to low prices, lacklustre demand and competition from other sources, including the local supply. The 30 lb index remained at 585.48 USD/ton, and the 27.7 lb index was also unchanged at 624.37 USD/ton.
General Economy – US: The American economy is heading towards higher levels, even if some of the December data came out less bright than what had been expected. For instance, the housing starts and housing permits both fell, after several months of large gains, the former partly impacted by weather conditions. The annual growth in those housing starts still came to a very robust 18%. Job market created only 76 000 new jobs. Still, the unemployment rate came down to 6.7%, the lowest number seen in five years. In January, manufacturing activity has picked up but the future outlook is a bit dimmer as the new order volumes started to shrink. Rising wages, fuller employment and improving household income levels, coupled with rapidly risen household wealth after the stock market gains supports higher consumer spending numbers this year. US GDP growth is expected to rise to 2.7-3.0% after an estimated 1.9% in 2013.
Copyright©FOEX Indexes Ltd
* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.