Pulp Substitutes Peaking With Bulk Grades Prices Bottomed
Although currency and ocean freight rates are negative against the Australian White paper exporters, the fundamentals being a steady increase in bleached pulp prices, has meant that the bleached pulp substitutes are in high demand. The graph below illustrates remarkable stability, far less volatile than bulk grades, which are predominantly influenced by Chinese packaging board mills.
Unfortunately, this price stability is also a reflection on the poor global condition of the printing and publishing industry segments, where we now find even printed coated mechanical ( OMG ), 18% higher in price than uncoated mechanical ( OINP ). Printed coated woodfree ( CBS ) also above Office pack ( OP ) which whilst considering yield losses, only demonstrates that clean uncontaminated fiber essential for deinking remains tight.
With the global regional demand for publication papers anywhere from a -11 to -28% decline, finished paper prices will inevitably reduce as production is taken out and/or machines switch to woodfree grades which would normally impact on recovered paper prices.
Asian newsprint mills have been volatile for some time and are expected to remain so. Some global capacity is closing, but as we know, Asian mills are reluctant to take downtime, resulting in grade change deviations. The fact remains that whilst printing papers may continue to decline in developed countries, packaging recycled fiber demand will remain strong but consolidating within fewer mill groups. 
Most white papers are still consumed by packaging mills as middle or top liner prior to coating. As indicated, newsprint mills are also consuming far more high quality white papers in Asia, meaning that secondary fiber demand remains strong even though finished paper prices and supply is weakening.