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Market Outlook Q3 2013

Markets

The Softwood market is tight as stocks have decreased further in October. The trend remains positive (demand as well as price wise) despite a wider price gap between HW/SW. We foresee a balanced market in the short-medium term. The Hardwood market remains weaker compared to Softwood with prices relatively stable. Hardwood stocks have increased and we expect further price pressure at the end of the year when suppliers will start to destock in order to boost its quarterly results.

Prices

During Q1 2014 the wider price gap between Softwood and Hardwood could lead to some substitution. On the other hand, the Softwood demand should remain somewhat stable. Pulp demand in China is quite good at this point in time, but the market could slow down as the Chinese New Year approaches (January 31st 2014). The price gap between Softwood and Hardwood is likely to widen further as new Hardwood capacities enters the market during 2014 with eventual impact on prices during the 2nd half of 2014, when the new BEKP mills (MdP and Suzano Maranhão) should be reaching the learning curve.


Other

The impact of the Chinese anti-dumping preliminary ruling which has imposed high duties on a number of US , Canadian and Brazilian Dissolving Pulp suppliers was the talk of the town during this month’s London Pulp Week. The duties affected 11 companies, some of them larger producers of Dissolving pulp who could decide to switch back their machines to paper pulp instead. A few companies have decided to appeal from the decision of China’s Ministry of Commerce, but nobody really knows if and when this could trigger any change in their official position. Dissolving pulp prices have started to move up slowly, no major impact foreseen this year, but the trend is upwards as of Q1 2014.