Credit concerns create pulp backlogs
October 16, 2008 By Pulp & Paper Canada
It’s not the laws of supply and demand, but credit and demand in China that are creating huge backups in pulp shipm…
It’s not the laws of supply and demand, but credit and demand in China that are creating huge backups in pulp shipments at the Port of Vancouver, a recent report by the National Post noted. While mills are running at full capacity and churning out product, only 25% of what is being produced is being bought, creating enormous storage requirements that warehouses in Vancouver are having trouble accommodating.
“So, there’s 75% that’s being stored, and the mills keep pumping it out while the warehouses are getting full,” the Post reported Dave Bedwell, executive vice-president at international ocean carrier COSCO Canada as saying. “Shippers are starting to seek outside the Lower Mainland now to find storage.”
The backlog is being propagated by the slow pace of Chinese buyers to open letters of credit, and as Bedwell noted, “that is causing a little bit of concern for some of us container guys, because pulp is the number one commodity shipped in containers.”
According to the National Post report, roughly 30% of BC’s pulp is shipped to China, with pulp shipments themselves accounting for approximately one quarter of all trade for container lines that call on Vancouver. However, shifts in credit and demand are causing these numbers to tumble.
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