Latest on pulp
BR,
Mad2
Copyright 2000 Cahners Business Information, a division of Reed Elsevier Inc.
All Rights Reserved. ÿ
Purchasing Magazine
May 18, 2000
SECTION: OFFICE PRODUCTS AND BUSINESS SYSTEMS; Pg. 135
LENGTH: 810 words
HEADLINE: Short supply pushes prices up
BYLINE: Tom Stundza
BODY:
ÿÿÿWith supply tighter than in the recent past, producers implemented an average $30/ton price increase for uncoated free-sheet office paper in the first quarter. Many end-use customers now are paying $890 for the reproduction bond product. Forms bond prices also have risen recently. For tonnage purchased on a per-truckload basis, 20-lb forms bond, stock tab, is up $60/ton to an average $770/ton and 20-lb OCR laser bond also is up $60 at $830/ton. And the price of 15-lb carbonless paper just rose 6% to $2,810/ton.
ÿÿÿÿWhile the free-sheet mills initially lobbied for $60 increases, producers backed off that proposal in the face of heavy buyer resistance in a somewhat uncertain marketplace. Note that while demand rose by 2.5% last year to an estimated 32.2 million tons from 31.4 million tons in 1998, first quarter sales were some 3% lower than the first quarter of 1999. Most industry insiders believe this was a temporary pause in an upward trend in demand growth. "Everybody expected a breather in the purchasing surge of late-1999," says one papermaking exec. "And we all expect to see demand growing again as the year progresses."
ÿÿÿÿLooking at pricing in months ahead, analysts are divided. Some suggest that the market for repro bond has peaked for the year at $890/ton because big-volume buyers will continue to see sales tags discounted at $830. Other mavens are more bullish and believe the mills will attempt another $60 increase if they see obvious strength in second-half order bookings. "Also note that if pulp prices continue to forge ahead while paper prices dawdle, there could be a missed opportunity for producers to offset some of their raw material costs," notes analyst Mark Weintraub at Goldman Sachs. He points out that spot prices for pulp, paper's chief raw material, are exceeding contract prices because of robust global demand. Analyst Anna Torma at Merrill Lynch believes "there definitely is pricing momentum in copy paper" and suggests that any increases in pulp costs in the months ahead "will definitely be matched with increases in copy paper prices."
ÿÿÿÿNot in dispute is the fact that office paper supply is somewhat tighter than most insiders recall. Apparent consumption of printing and writing papers exploded by almost 10% in 1997 and the papermakers responded with new capacity. However, demand growth was under 1.5% in 1998 and the 1999 growth rate of 2.5% was below expectations. The excess market supply from 1997 into mid-1999 depressed prices below $800/ton-as compared with a cyclical peak of $1,200/ton in mid-1995. So, the papermakers last year began to mothball inefficient capacity and boosted output by just 1.6% to 26.9 million tons from 26.5 million tons.
ÿÿÿÿMarket mavens suggest that production growth will be modest this year. Analyst Scott Merves of Bear Stearns says paper companies "came to realize that supply and demand is an important part of their business strategy," so they dealt with a persistent oversupply problem in white papers by closing some of their higher cost capacity. Upshot: North American uncoated free-sheet capacity utilization was just 91% last year. This was important because net imports increased to 5.3 million tons from 4.9 million tons the prior year. For 2000, it is estimated that production will rise by less than 2% to about 27.5 million tons and that net exports will increase by less than 4% to 5.5 million tons. Most market analyses project capacity utilization rates at 90%-95% for the year, with most mavens looking at the low end of that range if imports do increase above 1999 levels.
ÿÿÿÿPrices began a slow improvement in the second half of last year because mill and user inventories were reduced dramatically by a combination of better second-half demand and the reduced domestic papermaking. The mills closed 1999 with about a month's worth of supply, which is less than the historical average, yet leadtimes to distributors and merchants remain at about a week. Users also have been reluctant to boost stocks; buyer inventories last quarter were about 2% lower than the fourth quarter of last year.
ÿÿÿÿMerves contends that full-year demand will improve by another 2.5% to 33 million tons. "There will be continued pickup in the uncoated papers that go into copiers and printers," he says, "because, as people are on the Internet more, they tend to print out more stuff that they look up on the Web." A recent market analysis by Pulp & Paper Forecaster suggests that "the long-term effect of the rapid advances in the Internet and electronic media will only slow the rate of growth in consumption in printing and writing papers." The study suggests that the Internet does pose a substitution threat to publication grades, but not so much for office papers.
ÿÿÿÿ
LANGUAGE: ENGLISH
LOAD-DATE: May 19, 2000 ÿ
Copyright 2000 Canada NewsWire Ltd. ÿ
Canada NewsWire
May 10, 2000, Wednesday
SECTION: FINANCIAL NEWS
DISTRIBUTION: Attention Business Editors
LENGTH: 663 words
HEADLINE: Commodity prices slip further in April as prices of crude oil and base metals retreat, say TD economists;
Other major commodity price movements in March
ÿÿÿÿ- Lumber prices fell by almost 10 per cent in April, following a declineÿ
ÿÿÿÿÿÿof 4 per cent in March. "Prices fell in spite of the fact that theÿ
ÿÿÿÿÿÿlevel of residential construction activity remained high in both Canadaÿ
ÿÿÿÿÿÿand the United States," says King.ÿ
ÿÿÿÿ- Pulp prices rose to US$680 per tonne in April, as tight supplies andÿ
ÿÿÿÿÿÿfirm demand enabled producers to increase prices by the full US$40 perÿ
ÿÿÿÿÿÿtonne they had sought. Pulp prices, which had rebounded by almost 40ÿ
ÿÿÿÿÿÿper cent from the low reached in February 1999, are now at theirÿ
ÿÿÿÿÿÿhighest level in more than four years.ÿ
ÿÿÿÿ- Newsprint prices rose to US$555 per tonne in April from US$510 inÿ
ÿÿÿÿÿÿMarch, slightly short of the US$50-per-tonne increase sought byÿ
ÿÿÿÿÿÿproducers.ÿ
ÿÿÿÿ- Gold prices, which averaged US$311 per ounce in October 1999, slippedÿ
ÿÿÿÿÿÿto an average of US$280 per ounce by April 2000. "Gold prices wereÿ
ÿÿÿÿÿÿdampened by ongoing concerns about sales from central bank reserves,"ÿ
ÿÿÿÿÿÿnotes King.ÿ
ÿÿÿÿ- The agricultural products sub-index rose by 2.7 per cent in April, ledÿ
ÿÿÿÿÿÿby strong increases in hog prices and moderate increases in the pricesÿ
ÿÿÿÿÿÿof flaxseed and canola. "Wheat prices were supported by persistentÿ
ÿÿÿÿÿÿworries about drought conditions in the U.S. Midwest," says King.
ÿÿÿÿThis report, TD Commodity Price Report (including charts and detailedÿ
ÿÿÿÿtables), is available in PDF format on TD Economics' Home Page at:ÿ
ÿÿÿÿwww.tdbank.ca/tdeconomics. |
