Pulp Market Entering Uncharted Territory
Prince George, B.C. - After boasting record sales in the quarter just ended, the President and CEO of Canfor Pulp Limited Partnership says there are mixed signals in the pulp market outlook for the rest of the year.
During a conference call this morning to discuss CPLP's glowing second quarter, President and CEO, Joe Nemeth, says the uncertainty is coming from China where there is a strong downward pressure on prices that doesn't seem to 'fit' with where the rest of the market sits.
"To be totally frank, We're scratching our heads, we really are," says Nemeth. "If you look at the physical stock numbers and if you look at the strength in demand coming primarily from North America and Europe...you have an extremely tight, strong pulp market. On the other hand, you have some disruptions from China, in terms of consumption, that's putting real downward pressure on pricing, so the question we're asking is 'how long and how far can this current downward pressure continue?'."
The CPLP CEO says, historically, after the last two big peaks in pricing, the price for pulp came down quite quickly and quite far. But, he says, in both those cases, inventories were rising and were quite high...whereas, in this case, they're not. "It's all dangerous to ignore history, but we're in new territory in terms of inventory levels and that's what's perplexing."
Nemeth says CPLP has taken steps to remain competitive -- announced July list prices for NBSK pulp are unchanged for North America at US$1,020/tonne and US$980/tonne in Europe, but prices for China are down US$50 for this month and North American prices will fall by US$30 in August.
He adds CPLP's order books for the various markets it services are "fully sold".
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Posted by: DPJ on July 22 2010 10:53 AM