Europe's spot market tails off

paperloop.com
BRUSSELS, Aug. 10, 2001 (paperloop.com) - Europe is no longer the happy hunting ground it was for spot deal makers. With a weak Euro and rock bottom prices for regular business, there is little room for undercutting without sinking below production costs.
North American suppliers of spot hardwood tonnes have gradually disappeared from the European scene since the beginning of July. Their home market is a more lucrative place in present conditions. Canadian producers are already selling pulp at below full costs of production and suppliers from other parts of the world are coming up against the same predicament.
Eucalyptus, as one buyer in Germany put it, "doesn't really exist on the spot market any more." There is still some softwood around for those who seek spot tonnage. But the downtime which pulp mills have been forced to take, allied to the fact that there is precious little difference between the spot deals and the price for regular business, means buyers are more likely to be pestered by their regular suppliers to take their normal quota than by hawkers of spot tonnes out to do a deal.
What little Canadian NBSK that is available on the European spot market is priced at around $400/tonne. This is rather more than the Scandinavian equivalent, which has arrived on the market thanks to the over-production which June's Norscan figures revealed. Much of this pulp, which is available at some $20-30/tonne cheaper than Canadian NBSK, has found its way to Asia and the Middle East to compete for Government tenders.
The availability of spot tonnes from Scandinavian producers could frustrate regular European buyers who need no extra tonnes and would have to break contracts to take advantage of this cheaper surplus.
Reports of much stronger buying activity in Asia also explain a shift in spot pulp supply away from Europe. But this could be tempered marginally by a fall in the price of radiata pine pulp supplied to the region by Latin American producers.
The Pulpex August 2001 NBSK contract closed up $10.25 last week at $407.5 DDU net. Pulpex is not an exact mirror of the spot market but has proved a useful barometer and this rise suggests that there is at least little more downward pressure on spot prices.
Spot prices in Europe during the week ending August 10 were: NBSK $370 - 400/tonne, eucalyptus $330 -340/tonne.