Asian Mills Depressing WP Prices
21-05-2010
As pulp prices peak in May, there is evidence of a weakening for June. The major influence being the uncertainty in the Chinese economy and short term demand for fiber softening due to speculators dumping surplus stock. The amount we do not yet know, however US$10-15 is anticipated for all recovered paper grades, even though supply from Europe will be limited in June and July. Mills are just holding off ordering until they feel that prices can fall no further. Suppliers, most of whom have not fully recovered from the global recession, will no longer absorb both ocean freight increases and price reductions when critical export volumes remain depressed.
 
The May price correction forecasted in April, was mainly targeted for OCC with a reduction of US$8. This was becoming uncompetitive with unbleached pulp, however this mid month price reduced a further US$5 from all Asian board mills being a collective measure to reduce prices for all virgin and secondary fiber, too high for mills to pass on in their finished products.
 
Export volumes out of Australasia for the next two quarters are anticipated to reduce. This is both seasonal and an actual reduction in the consumption of printing and writing papers, before seasonally recovering again in the fourth quarter. In the interim, demand and fiber prices will remain volatile at a time when shipping lines are pushing for price restoration to recover 2008-2009 losses.