Pulp Industry Perspective
2nd Quarter 2013
Pulp Prices Rise again in Q2
By Jesse Marzouk
North American
pulp prices continued to move higher
in the second quarter of 2013 after
rebounding in the
first quarter of 2013.
NBSK list prices in
the U.S. increased
$50 per tonne from
$900 to $950. Prices for NBHK in the
U.S. also increased, rising $60
per tonne to $875. While these
list prices are the highest since
October 2011 for NBSK and
September 2010 for NBHK, the
effective selling prices are actually lower than at those points.
Over the last few years there
has been an increasing disconnect between list prices and
actual prices paid by customers
with contracts, as market discounts have increased from the
15% range to higher than 20%.
The rise in hardwood prices
in North America comes as a
little bit of a surprise to market
participants, especially with worldwide inventory at balanced
levels. It makes sense, however, when considering the impact
from the conversion of SAPPI’s
Cloquet, Minnesota mill from
NBHK to dissolving pulp. That
changed the demand dynamic in
North America as SAPPI’s paper
mill in Cloquet is now a net purchaser of hardwood pulp instead
of a net seller. Furthermore,
demand for hardwood pulp has
increased as a number of new
tissue machines have started
production in the U.S. over the
last year.
Market prices for hardwood
pulp may have peaked, however, as a large amount of South
American eucalyptus pulp supply
will hit the market over the next
year. Some of the machines
have already started and are
working towards reaching capacity, while others are slated to
start later in 2013 and 2014.
Interestingly enough, a producer
of dissolving pulp that spent
more than $150 million to convert a NBHK mill to dissolving
pulp, is rumored to have offered
old customers a chance to purchase NBHK. This may signal a
change in price direction for both
viscose dissolving pulp markets
and NBHK.
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.