Asian spot pulp prices look to have bottomed out

SINGAPORE, Aug. 27, 2001 (paperloop.com) - Spot pulp prices in China and Korea seem to have hit rock bottom and hardwood pulp prices are showing signs of rallying. Overall pulp buying is picking up thanks to the current low prices. Supply has tightened for several grades, but sources are wary of any optimistic prediction that pulp prices will surge upward by the end of the year.
The benchmark northern bleached softwood kraft (NBSK) grade is trading at $390-400/tonne on the Korean and Chinese spot markets. Prices slipped to as low as $380/tonne in early August, but have now begun to bounce back. Buying activity has firmed up in China in particular.
The upward price movement in NBSK has been held back by a flurry of radiata pine pulp shipments from Latin America to Asia though. Suppliers slashed the list price of radiata pine pulp to $370/tonne, a $40/tonne drop, for Chinese buyers in early August. The volumes supplied at this low price level were eaten up within the following few days and the next deliveries will arrive at Chinese ports after the end of September.
Given the extensive shipments to come, it is hard to see radiata pine pulp prices moving up in China until the end of the year, unless producers announce price hikes, according to one major trader in Beijing. The grade is selling at $370-380/tonne in China and Korea.
Russian bleached softwood pulp has maintained stable trading volumes in China. Prices are now almost on a par with radiata pine levels at $360-380/tonne.
In the hardwood sector, sales of Indonesian mixed tropical hardwood pulp have been contracting due to a lack of supply. This has led to a buoyant market for Brazilian eucalyptus, which is changing hands for $380-390/tonne in the Chinese and Korean spot markets, up $10/tonne from last week.
But sources said that Indonesian mixed tropical hardwood pulp still plays a key role in the regional market. Paper mills are in the habit of using this grade. On top of that, once normal supply resumes, and as prices are $20/tonne below eucalyptus, many paper mills may decide to purchase Indonesian mixed tropical hardwood grade in the price-sensitive spot market, one trader said.