Market conditions favour pulp price hikes in 2018
(November 23, 2017) On a whole, market conditions favour pulp price hikes (especially hardwood). Tight markets, low Chinese pulp inventories, healthy demand favour a “pricing outlook that will again surprise on the upside in 2018, not to mention a very bullish 3-4 years’ outlook on a lack of supply coming to the market,” as per BTG Pactual analysts in their report dated Nov. 15, 2017.
Additionally, the Chinese recently released Environmental Protection Controls for waste paper imports (setting impurities at 0.5%), which could materially limit imports of recycled material, and generate cost inflation along the chain (bullish implications for pulp).
Price Hikes
November saw both NBSK and BEK producers coming out with price hikes.
Fibria (Brazil) last month (Nov 15) announced yet another hardwood hike for December of US$30/t valid for all regions. Fibria’s list prices (US$30/t hike) are now: (1) Europe: US$1000/t; (2) North America: US$1180/t and (3) Asia: US$810/t. If implemented, this would imply net prices of US$720-750/t for pulp players, which compares to BTG Pactual’s 2018-19 forecast of a net price realization of US600/t. Suzano (Brazil) has also come out with a USD30/t hike in BEK prices globally in December. Ence (Spain) is set to increase its BEK price by $30/tonne to $1,000/tonne from December 1. Arauco (Chile) has come out with a $50/tonne price increase on bleached radiata pine in China, effective with December shipments; BEK, UKP up $30/tonne.
“Market outlook for BEKP globally remains positive with strong demand in all markets including Europe. The increase in demand clearly outpaces the supply keeping the stock levels low. Specifically, in China prices for virgin pulp are stronger day by day,” Ence said in the price increase announcement on 23 October.
In NBSK, West Fraser has slated a $20/tonne December rise on NBSK pulp in North America; some NBSK producers have lifted China to $900-910/tonne. Canfor, Domtar have also set new $20-30 hikes for NBSK (the year’s 10th NBSK hike). Canfor Pulp has announced a $20/tonne NBSK pulp price increase in North America, effective December 1; $10/tonne rise announced for China. Domtar has slated a $30/tonne price increase on NBSK, SBSK, and fluff pulp prices, effective December 1.
Mercer International has announced an increase to NBSK pulp list price in Europe to $1,030/tonne, up $30/tonne on December 1.
Additionally, US pulp spot market prices increased $10-20/tonne last month.
Ilim Group (Russia) has set a $50/tonne price increase on BSK pulp in China, effective with December shipments; for BHK $30/tonne rise.
Europe
Meanwhile in Europe, LWC, MWC and SC-Paper prices could increase by up to 8 % from January 2018 if producers get their way, EUWID reported last month.
As per Euwid, the hike in coated and uncoated magazine paper prices from the start of the next year was motivated by higher production costs and/or good demand, according to the companies involved.
Italy’s Burgo Group announced a 7-8% price increase for its LWC and MWC magazine paper grades for all new orders from January 2018. The price hike was necessary “to ensure the sustainability of the industry after continuous rising costs and consequent erosion of profitability,” the company explained.
According to Sappi, order books are strong, but the margins are depressed by the severe input cost inflation. The company said it would continue passing on this cost inflation by increasing its LWC and MWC grades prices by 6-8% from 1 January 2018 for all markets
SCA sees an improved global market balance as well as improved demand for printing. Against this background, the Swedish publication paper manufacturer is asking for a €40/t price hike for its coated and uncoated mechanical reel paper on the market in Europe
And in mid-October, Germany’s magazine paper manufacturer Leipa had announced a €30/t price hike for LWC, valid for all grades and markets with effect from January 2018. (Sources: EUWID, RISI, BTG Pactual, PPPC, & other industry reports)
