Pulp Industry Perspective
3rd Quarter 2013
Pulp Prices Largely Flat in Q3
By Jesse Marzouk
North American
pulp prices moved
little in the third quarter after increasing in
the first two quarters
of 2013. NBSK list
prices in the U.S.
declined $5 per
tonne from $950 to
$945. Prices for
NBHK in the U.S.
also decreased
slightly, falling $5 per tonne to
$870. While these list prices
are near 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%.
In the short term, it appears
that prices of hardwood and
softwood are set to diverge.
Worldwide producer inventory
levels for softwood is at 28 days,
the low end of a range considered balanced. The slower than
expected startup on Ilim Group’s
large pulp mill in Russia has
caught buyers off-guard, some of
which have scrambled to secure
softwood supplies. It is on the
back of the inventory level figure
that producers appear to be
successful in raising the list price
of NBSK $20 to $30 per tonne in
October.
Hardwood prices, on the
other hand, appear to be headed
in the opposite direction. Worldwide producer inventory levels
sit at 48 days, well above balanced levels. Additionally, as
the capacity expansion of eucalyptus in South America continues, with 2.8 million tonnes of
expected to come online in the
fourth quarter, the situation may
get worse. Further exacerbating
the supply issue, is the likely
transition of some production of
Fortress Paper’s dissolving pulp
to NBHK. This is an occurrence
that Hilco mentioned as a rumor
in its previous quarterly perspective, and now is likely as China
probably will implement duties
against dissolving pulp from
Fortress and other producers
over the next six months.
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.