Pulp Industry Perspective
3rd Quarter 2012
Pulp Prices Decline in Q3
By Jesse Marzouk
North American
pulp prices were significantly lower in the
third quarter of 2012.
NBSK list prices in the
U.S. decreased $70
per ton from $900 to
$830. Prices for NBHK
in the U.S. also declined, dropping $50
per tonne to $735.
As has been the case for
the better part of a few years,
the short term demand outlook
for consumption of pulp in China
has driven global pulp prices.
China was well stocked with
pulp heading into the third quarter of 2012, resulting in declining prices around the world as
producers tried to find a home
for their pulp.
Heading into the final quarter of 2012, it appears that the
hardwood and softwood markets are heading in opposite
directions. On the back of August global pulp inventory data,
which showed the softwood market in good balance, producers in North America announced
$20 price increases for October
shipments. Meanwhile, hardwood pulp inventory levels still
remain out of balance, and
while producers may attempt to
raise prices, prices will likely
have to drop in the medium
term before the market becomes more balanced.
Furthermore, it will be difficult for producers to raise prices
much beyond current levels in
the near term. While the softwood pulp inventory correction
in China appears to over, capacity additions will take time to be absorbed. Within the next
three to four months, capacity
additions of approximately
850,000 tonnes will come from
softwood suppliers in Canada
and Russia, while a large 1.5
million tonne eucalyptus
(hardwood) plant in South
America may create a larger
divide between hardwood and
softwood prices. Other hardwood additions in South America through 2014 totaling another 2.8 million tonnes may require closures of other hardwood facilities to keep that market balanced over the next few
years.
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.