Features Research & Innovation
US Newsprint & Pulp Indexes (October 01, 2006)

The paper industry order books are rising again after the slower summer months. Will the cyclical peak be a seasonally typical one or stronger or weaker than usual? At first glance, European order in-flow more or less follows the typical seasonal patterns. In the U.S., the going appears to be getting a bit tougher even if some grades, such as uncoated free sheet are still doing well.

Newsprint demand continues to fall in the U.S. Closures of capacity appear to be insufficient and the first downtime announcements at the existing mills have been published. In the containerboard market, high operating rates have increased the inventory levels, additional volumes are more easily available and prices in some of the U.S. liner export markets are reported to be softening.

In Europe, delivery volumes to the regional market remain good. Supply cuts in the coated paper sector have helped the operating rates but the pressure from Asian paper continues and keeps both the LWC and CWF markets quite competitive. The strengthening of the Euro by nearly 1.0% again against the basked of the non-EMU currencies exerted downward pull on the index values.

Supply and demand remain in a tight balance in the pulp market. The start-up of the first of the two new Chilean mills is not showing, at least not for the time being, in the availability of spot volumes or in the pricing behaviour. Stocks at ports usually go up in August. This year, EUROPULP reported a small decline in the stock levels. They were almost 12% lower than at the end of August last year. Price increases announced in Europe, typically by 20 USD/ton, either from September or October, continue to trickle through.

In the North American pulp market, the situation remains tight. A long string of closures has affected supply both in the regional markets and the export potential. Most producers have separately announced price increases, typically by 20 USD/ton to 770 USD/ton from September. A large number of quotes were already above the previous week’s (week of September 4, 2006) level. The range was still from 750 to 770. Our PIX US NBSK benchmark took a large step upwards. The index moved up by 11.6 USD/ton, or by 1.55%, and closed at 763.25 USD/ton.