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PULP<br />
Pricing - Confidence regained (by Dougal Pitt, Commercial Manager Pulp)<br />
Over the past few months, paper grade<br />
market pulp producers have announced<br />
price increases for all grades of pulp<br />
being sold into key global markets.<br />
Over the past few months, paper grade<br />
market pulp producers have announced<br />
price increases for all grades of pulp<br />
being sold into key global markets. We<br />
believe that these initiatives, in Western<br />
Europe and North America particularly,<br />
have helped bring to an end the erosion<br />
of value that has been a part of the<br />
market for five consecutive quarters.<br />
However, we are mindful that seasonal<br />
factors are typically supportive of<br />
positive price moves at this time of year<br />
and certainly the recent weakness of the<br />
US dollar has been modestly supportive<br />
of improved pulp pricing. The question<br />
that we all have of course is whether or<br />
not these price gains will prove short<br />
lived in nature. By calendar year end<br />
850,000 tons of softwood and 1.5 million<br />
tons of hardwood paper grade market<br />
pulp capacity is expected to be<br />
commissioned, with further expansions<br />
planned for 2013.<br />
Confidence amongst pulp producers is<br />
fueled by the notable rise in volumes<br />
shipped to China since August.<br />
Furthermore, Stocks at European pulp<br />
converters are relatively low and<br />
suppliers claim that there has been little<br />
sign of oversupply in the market.<br />
Moreover, stocks at pulp producers are<br />
below that held during the previous year.<br />
In addition, demand for pulp has been<br />
growing at a regular pace in 2012, much<br />
Source: PPPC<br />
as it has for several years, despite<br />
weaknesses in the economies of Europe<br />
and the USA.<br />
So we foresee some success by market<br />
pulp suppliers in boosting their prices not<br />
only because costs remain a key long<br />
term driver. Now, just as in the past,<br />
pulp is strongly correlated to commodity<br />
cycles as well as relative rates of<br />
exchange between sellers currencies<br />
and those of buyers.<br />
The graphic provided by the<br />
Pulp and Paper Products<br />
Council (PPPC) in October 2012<br />
depicting shipments per month<br />
for 2011 and for the year-todate<br />
September 2012<br />
illustrates the gain in demand.<br />
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