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US Newsprint & Pulp Indexes (July 01, 2006)

NEWSPRINT…

NEWSPRINT

In the paper industry, the first data over the month of May came out positive. In the U.S., box shipments were up 9.5% over the particularly weak May 2005 demand. Inventories fell – after earlier increases by over 100, 000 tons, twice the typical seasonal decline, most of it in box plants. Efforts to drive through the earlier announced price increases continue. In Europe, UTIPULP statistics show a small increase in consumption over April and May 2005.

In North America, weakness in newsprint demand persists. In spite of the partially successful increases made earlier this year, the strength of the CAD against USD continues to erode Canadian producers’ profitability and at least one producer has announced a further price increase from August.

NBSK PULP

In the pulp market, tightness prevails. The combined impact of closures and maintenance downtime has reduced supply, especially of BSKP. Inventories in the supply chain are low. UTIPULP reported European consumer stocks as marginally up from April, but they were still 11% lower than in May 2005. In terms of days, stocks remained at 26 days. Spot volumes are difficult to find and spot prices have moved up. Several producers have separately announced price increases for BSKP, typically by 20 USD/ton in Europe from July.

The tightening of the global pulp market is perhaps most strongly felt in North America. Demand fell by nearly 3% for BSKP during the first four months of the year, but supply losses were more significant. At some paper mills production is affected by a lack of supply. Several producers have separately announced a further increase, by either 20 or 30 USD/ton, typically to 750 USD/ton, as of July 1. The earlier announced increases continue to go through. Reported prices range from 690 to 730 USD/ton. FOEX US NBSKP index climbed up by 4.8 USD/ton, or by 0.7%, to 720.23 USD/ton the week of June 20, 2006.

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