paperloop.com
BRUSSELS, July 26, 2001 (paperloop.com) - Financial and logistical problems as well as unattractive prices have diminished Europe's attractiveness as a market for Indonesian hardwood pulp suppliers, who were blamed for the dramatic fall in hardwood pulp prices. 
On top of that, reported action in Italy by an environmental group against a paper producer said to be buying Indonesian pulp is another factor that may have stemmed the flow of Indonesian hardwood to the region. 
While the action was said to be "nothing new" by one importer of Indonesian pulp, he conceded that buyers were asking more questions about the timber source for these products in the wake of the campaign. Another supplier added, "This means that certain customers will not use Indonesian pulps anymore."
Separately, the environmental group Friends of the Earth has mounted a high profile campaign in the UK against the use of non-plantation hardwood in papermaking.
Prices near bottom
Market pulp prices remain hard to pin down. As one buyer put it, "All the numbers are low and all the numbers are fluid." Eucalyptus pricing is particularly elusive as more deals which are a mixture of regular and spot business emerge. As gross prices for regular business net down to something very similar to spot offers, there is a genuine reason to believe that the bottom has been reached for this grade.
Northern bleached softwood kraft (NBSK) prices slipped gently between FOEX's July 17 figure of $478.91/tonne and $477.27/tonne on July 24, although most buyers agree, and sellers concede, that new deals for regular business are likely to be done at $460/tonne. Spot prices for NBSK are even lower at a price below which many North American producers fail to break even. Downtime was insufficient to prevent these break-even levels from being reached. There is little room for spot prices to fall further.
More downtime can be expected in the Norscan countries as a result of such weak prices. Norske Skog Canada has announced a further 14,000 tonnes of market pulp downtime, which brings the company's third quarter market pulp curtailment up to 28,000 tonnes.
If inventories remain static for the next two months, during a period when they traditionally rise, and then fall during the fourth quarter, this would set the scene for prices to creep up again in the first quarter next year or even before. A strong dollar and poor worldwide economic performance will hamper any rapid change in the pulp market's fortunes though.
Evidence that the market is approaching a period of price stability is mounting. One supplier reported, "We have already had some requests from customers to price pulp for July and August, which is an indication that they think we have reached the bottom."
Pulp consumption in June dropped by more than 5 percent compared to May, according to UTIPULP figures. The participating countries reported consumption of 1,044,359 tonnes in June, which left stocks virtually unchanged at 1,046,052 tonnes. This equates to some 28 days' worth of pulp.