North American pulp producers' list for NBSK is now at...

North American pulp producers' list for NBSK is now at $1000/admt level. Sodra (3rd largest market pulp producer) announced $20 June increase making it's NBSK list $980/admt c.i.f. BEK will go up another $30/admt since inventories are at record lows. Chile's losses from the earthquake now expected to hit 1 million tons.
Prices may peak in July and then slide downward the rest of the year some observers have suggested. Days of supply slid another 2 days in April.


Analysis
NBSK's former high was $985/admt in 1995. Since then a half dozen mills in Canada have ceased operating but now 3 are coming back on steam. The former Pope & Talbot mill at MacKenzie, BC will start up in August but APP (the new owners) expect to take all this NBSK to China for their mills there to produce value-added papers. They must spend, before start up, an additional $30 million. Catalyst Paper will ramp up it's NBSK line at Crofton, BC to produce 165,000mt/year but, like MacKenzie, all this pulp will be going to China. Terrace Bay, Ontario (formerly operated by Buchanan Forest Products) located on the north shore of Lake Superior will also come back to life this summer but expects to ship only to the US and southern Europe.
There is some "brand new" capacity coming and that is APRIL's expanded mill at Rizhao City. This is an integrated mill with board machines producing carton board
for cigarette packaging. The new tonnage will be BHK (eucalyptus and acacia) and will undoubtedly be shipped to APRIL's other mills on the mainland.
If there is another price increase in July many believe it will be the last for the year. Paper mills traditionally take 2 weeks downtime in the summer which severely restricts purchasing levels.....ultimately causing pulp producers to discount unsold tonnage. Some say this will be temporary while others say it may usher in a long downhill slide into 2011. The tightness in the global market these past two years has been extremely beneficial for North American producers who have insisted their customers sign long-term contracts if they wanted to continue to receive monthly shipments. Many mills report shipping only contract tonnage...that there is absolutely no spot tonnage available. However, with the jv mill in Uruguay (Arauco and Stora-Enso) the next greenfield mill to come on stream but not until late 2011 probably, it must be remembered that global demand historically creeps up about 5%/year. India's new paper machines will have enormous appetites and this may keep the market from falling apart. In that case all those pulp customers will be very happy they have those contracts in place!