BRUSSELS, Aug. 23, 2001 (paperloop.com) - In a quiet market due to the mid-year vacation period, there have been reports that buyers have sought to settle pulp prices for the next three months. This suggests that the threat of a price rise in the near future is being taken seriously, or at least that prices are believed to have fallen as low as possible. The fear of buying pulp today on the basis that it might be cheaper tomorrow seems to have all but disappeared.
Virtually unchanged Norscan inventories for July were greeted with enthusiasm in many quarters. The average rise in July is 147,000 tonnes and this year, the increase was a mere 5,000 tonnes to 1.785 million tonnes, based on an operating rate of 84.6%. The doom merchants who did not believe the industry capable of controlling stocks have been proved wrong, according to some sources who believe all that is needed now is a good Norscan result for August, and the market will be ready for a price rise in the fourth quarter.
The widespread attitude to such optimism was succinctly summarized by one supplier who said, "One should never talk down somebody who's talking up the market," which is, of course, very different from agreeing with the viewpoint.
Firm signs of a recovery are absent as yet, and as one supplier put it, "There is still a lot less paper being used than we would like." The rate of decline of the FOEX pulp benchmark price of northern bleached softwood kraft and eucalyptus has slowed down and buyers are reportedly happier to put their names on bales of pulp now than they were a month ago. The result is a gradual shift in inventory from seller to buyer. Suppliers have made it clear that they are unwilling to go any lower on the price front just to get business. 
The motivation for price rises is particularly strong in Europe, as the improvement of the euro has changed the relatively strong position of the Euro-zone producers. As such, any increase would be dressed up as a "correction". But North American producers are also strongly motivated to raise prices as they are operating at uneconomic levels. The danger feared by many analysts is that suppliers, encouraged by dwindling stocks, will crank up their production again and put paid to any chances of a price recovery.
Certain short fiber producers from South America are reported to have abandoned the Italian market temporarily as price demands in the country have hit lows that these suppliers are not prepared to entertain. Uncertainty over the future of Indonesian short fiber supplies is also helping to shore up the hardwood supply position elsewhere.
The spot market continues to dwindle in importance and buyers reported they are receiving far fewer unsolicited offers of cheap pulp than earlier on in the mid-year vacation period.