Pulp Industry Perspective 1st Quarter 2013

Pulp Prices Rise in Q1

By Jesse Marzouk

Pulp Perspectives Graph Q1 2013North American pulp prices continued to move higher in the first quarter of 2013 after rebounding in the final quarter of 2012. NBSK list prices in the U.S. increased $30 per tonne from $870 to $900. Prices for NBHK in the U.S. also increased, rising $60 per tonne to $815. A price hike of $30 per tonne on softwood grades has been announced in the U.S. for April, although the implementation is far from certain. China is the large market mover in the pulp market and although prices have rebounded in the Chinese market since the end of last year, it appears that further price hikes in that market will be difficult over the next few months. If producers have difficulty raising prices in the Chinese market, they will likely have the same difficulty in the U.S. market.

Looking forward to the medium term supply situation over the next few years, the softwood market appears to be in better balance than the hardwood market. There is relatively little supply that is being added to the softwood market, while there is more than four million tonnes of eucalyptus hardwood supply that is being started in South America between the middle of 2012 and the end of 2013. While some of the additional capacity will be absorbed by increased demand for tissue products around the world, it will likely put pressure on hardwood pulp prices and higher cost hardwood pulp mills in North America and Europe. Some of these higher cost mills have already planned transitions to other grades, including dissolving pulp. With the viscose dissolving pulp market already under severe pressure from excess supply, it is likely that more hardwood pulp mills in North America and Europe will be forced to close when faced with a decision to spend hundreds of millions of dollars on a grade conversion that may yield marginal results at best. A recent inquiry by China into dumping of dissolving pulp will further dissuade companies from attempting a conversion to dissolving pulp.

Jesse MarzoukJesse Marzouk is a vice president and forestry products specialist. He has appraised numerous U.S. and Canadian pulp, paper, and lumber-related companies involved in manufacturing and distribution. Jesse received his MBA in finance from Kellogg School of Management at Northwestern University, and has a degree in finance and accounting from Indiana University.