Pulp Industry Perspective
1st Quarter 2013
Pulp Prices Rise in Q1
By Jesse Marzouk
North 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 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.