Pulp Industry Perspective
1st Quarter 2012
Pulp Prices Bottom in Q1
By Jesse Marzouk
Pulp prices bottomed in the
first quarter of 2012, after declining during the second half of
2011. NBSK list prices in the
U.S. declined $20 per tonne to
$870 per tonne. Prices for
NBHK in the U.S., however,
increased $30 per tonne from
$705 to $735.
The pulp market was out of
balance in the second half of
2011, but is more in balance
heading into the second quarter
of 2012. Balance in the worldwide markets is typically considered to be approximately 38
days’ supply for hardwood and
30 days’ supply for
softwood. The
most recent data,
based on February
numbers, placed
hardwood supplies
at 35 days and softwood supplies at 31
days. These are
down from 41 days
for hardwood and
34 days for softwood in November 2011.
Heading into the second
quarter, pulp list prices are
poised to increase. Many major
producers have announced
increases on NBSK for delivery
around the world, with announced North American list
prices of $900 per tonne in
April. No price increases have
thus far been announced on
NBHK in North America for
April, although prices moved up
in March.
Looking ahead to the balance of the year, Hilco expects
pulp prices to remain higher than their lows in Q1. There is
only 500,000 tonnes of additional capacity expected in the softwood markets worldwide. The
hardwood market is more uncertain as some eucalyptus pulp
expansions in South America
are proceeding slower than
anticipated. It is likely that the
majority of expected expansions
will occur, but the timing is difficult to forecast. For higher cost
hardwood mills, many of which
are situated in North America,
the longer the South American
capacity stays off the market,
the better.
Jesse 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.