More Pain Before Gain
20-09-2013

 

Historically the month of September is the commencement of an industry upturn leading up to Christmas, however 2013 sees the export market stumbling when it should be finding its feet. There are many reasons starting with pulp prices e.g. BHK down to US$570 and when 30-40% yield loss is considered pure hard white waste can be worth no more than $370 in the eyes of many recycling mills. Normally the back to school market for SWL and 1st Whites also starts to improve at least from October, but this year it may be late November with less imports as mills use more cheaper bleached pulps.

In India and Indonesia the currency has weakened against the USD making imports more expensive. Some Asian mills are only running at 60% capacity with high finished product inventories which are softening in price. The market prices below demonstrate the difficulty mills have to make a profit when it costs $200 per tonne to produce paper and boards.

 

Coated whiteback board    $630-660 down $20

 

Coated grayback board    $490-550 down $10 

 

Unbleached kraftliner       $620-630 down $15

 

Kraft top-liner                     $490-530 down $25

 

Testliner                            $395-430 down $25

 

Fluting                                $320-400 down $30

 

Uncoated Woodfree         $785-835 down $35

 

Coated Woodfree            $710-760 down $35

 

This all places downward pressure on waste paper prices with some European mills selling into China at the Chinese domestic recovery price levels to move surpluses, which is a concern should this continue much longer.