A Soft Landing Over the Next Six Months?


The price correction in virgin pulp prices during July and August of around twelve percent, will inevitably push down the prices for pulp substitutes. Such prices had already become uncompetitive against bleached pulp in many markets, especially when all yield and bleaching costs are considered. Asian buyers especially Chinese, have been reluctant buyers of all grades for some weeks. They await the flow on affects from power allocation, domestic and global demand, which remain uncertain during this seasonally slow period.
For Australasian recovered paper suppliers, any price decrease will hit hard when most were already suffering from currency revaluation, reduced generation from printers, and generally slower retail spending. This will affect packaging supply. The second half of 2011 was always going to be tough in Australia, with green politics and the pending carbon tax as well as a change in retail buying patterns shaping up to be a scare, not felt since the GFC in 2008.
A pending price decline for pulp substitutes of AUD100 can be anticipated with reduced demand until Q4 and possibly Q1, 2012. This is necessary to bring waste paper export values back to a more competitive and sustainable level. Unfortunately, from some recovery areas these pending new price levels may also see some suppliers think very seriously where their future is within the paper industry.