Blog Post

New year starts with improved pulp price momentum; price hikes announced for February

(Singapore, January 17, 2017) While 2016 was a somewhat quite year for pulp prices and no major prices movements were reported in December 2016, the new year has started off on a strong note with both NBSK and BEK producers looking to push price hikes.
In Europe, for instance, “different manufacturers of northern bleached softwood kraft (NBSK) informed their European customers of plans to raise their prices for NBSK pulp to $820/metr.t with effect from 1 January.” As per the January 10 EUWID report, “several industry players believe that they will be successful in implementing their asking prices as demand for NBSK did not level off over the Christmas and New Year holidays and no large spot lots were doing rounds at the end of the year.”
As per EUWID, “bleached eucalyptus kraft (BEK) pulp are also trying to lift their prices on the market in Europe. In December, several manufacturers have announced a price hike for BEK pulp, effective 1 January.” And in China, as per RISI reports, suppliers are pushing for price hikes of up to $40/tonne.
Meanwhile, Canada-based West Fraser came out with the first Feb. 1 pricing announcement in any market worldwide, hiking Feb. 1 softwood, hardwood BCTMP price by $20/tonne in China.
In fact, some BEK producers have been coming out with their second round of global price hikes.Fibria has informed clients of a newUS$30/tprice increase, valid for its February sales. “The company targets list prices in Asia at US$600/t,US$710/t in Europe and $890/t in North America. This marks the second round of global price hikes recently, and would entail the 4th price hike in Asia since prices declined below US$500/t in the region,” a BTG Pactual report dated January 12 disclosed.
Chile’s Arauco is also set to increase market pulp [BSK] prices by $20-30/tonne in China effective with February shipments, becoming the third major producer to announce a February price hike for China after West Fraser and Fibria.
Other producers to hike February prices for China include Ence, with a $35/t BEK price hike w.e.f. Feb 1; Eldorado with a global $30/tonne BEK price increase effective February 1; and Chile-based CMPC with a $20-30/tonne price increases in Asia effective February.
Analyst Report
With APP having started up its OKI pulp mill in Indonesia — first BHK pulp bales were produced on Dec. 14 — analysts are waiting to see what impact the new capacity will have on the HW market.
Commenting on the 2017 outlook for the global hardwood (HW) market, a BTG Pactual report dated January 12, 2017, said: “The late start-up of APP’s Oki plant helped relieve many concerns over the S&D outlook for HW. It caught Chinese buyers unprepared with low inventories in expectations of lower prices ahead and this allowed room for a series of hikes (4 since October in Asia). In addition, APP stated that it will “only” allocate ~1.2Mt of pulp to the market (= lower price distortion potential?) and that its ramp-up should be at a cautious pace (positive). On top of that, some closures/conversions (400-600kt) from APRIL have also provided some additional relief. To finalize, the demand side of the equation could also surprise positively as repressed demand (from expectations of an earlier OKI start-up) could lead to a surge in pulp imports into China (RISI expects at least +1.2Mt, above 6% y/y growth). We see the operating rate for HW in 2017 at 90% which arguably is a tight market, supportive of price hikes.”
To read related articles look up:
1. “Improving market fundamentals for HW pulp; a tight market to support price hikes”
2. “Updated: BEK prices continue to rise; NBSK prices firming up in China”
3. “Pulp producers come out with price hikes for BEK & other pulp grades w.e.f January 01, 2017” (Source: EUWID, RISI, BTG Pactual, PPPC & other industry reports)

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