Date : 19/11/2009
Market demand in Europe improved substantially in Oct 09 and Nov 09. At present, price increased of Euro60-65 per ton seems to be effective. One of the key reasons for the success was low inventory holding at box plants. Most box plants are now replenishing the stock. The production curtailment and permanent shutdown of mills are also the key reasons that pushes paper prices upwards.
However, brown Kraftliners prices remained steady without any sign of increase. This is partly due to high stock due to last minute locked of orders from US mills before removal of black liquor subsidies.
Many believed that prices of KLB will follow suit in next 2 months once the inventory are used up. However, recycled containerboard prices were on the uptrend over the last 2 months. Most box plants reported that most paper mills are very firm with the prices increases. As such, many believed that Fluting and Testliner will continue to increased.
The critical time is in Dec 09, whereby it is a low demand season. My views are prices of Containerboard and Kraftliner board will maintain at present price level till next year. If mills miss the opportunity in Nov 09, chances of successful price increase in Dec 09 will be low.
Showing posts with label Market Updates. Show all posts
Showing posts with label Market Updates. Show all posts
Thursday, November 19, 2009
Thursday, November 12, 2009
Market Updates - KLB price hike
Date : 13/11/2009
The recent move by US policy maker in removing black liquor (material used in pulping) credits has resulted in price hike for KLB (Kraftlinerboard) across Europe and Middle East. Some believed that the price hike will eventually spread to Asia as well.
In view of the raising production cost of KLB after the removal black liquor credit, new contract price of KLB will increased substantially. As market reseach showed that with the current subsidies most of these pulp mills were only making a marginal profits. Thus, the sustainability of these mills depend very much on the success of future price hike. Similarly, the recent shutdown of containerboard mills by major corporate companies in US will further strengthen mills position in raising the price of KLB. However, the imports of Kraft Top Liners from Asia into US will give a challenge to domestic US mills in raising it prices.
With the removal black liquor subsidies, one may foresee that pulp prices ie USKP and BSKP will also raise to its next level. As such, there are more sentiments that indicate that future prices of KLB will be higher than current year prices. Similarly, one may also foresee that pulp substitutes (recovered paper) like Hard White Shavings and AOCC will escalate further from current prices.
The success of price hike for KLB is very much dependant on the followings
a. The demand for KLB in 1Q2010. At 4Q2009, we foresee that prices of KLB will maintain due to normal low demand season - low working days (Christmas & New Year) despite high in Unbleached Softwood Kraft Pulp prices. However, generally in Asia, business is slow in 1Q2010.
b. The price gap of the Asian Kraft Top versus KLB. At present, the price gap is substantial. However, with the continuous increased in USKP price, this may close the gap. Thus, price hike for KLB may be successful.
c. The new start up of a KLB mill in Australia in 4Q2009. The additional supplies may deter the price hike of KLB. At present, there are a substantial exports of Australian KLB to US.
d. The exchange rate of USD vs other major currencies. The continuou weakness in US Dollar may result in cheaper KLB even after the price hike of KLB
Based on the above sentiments, there is high possibility that the increased may not be successful. Nevertheless, US mills had no alternative but to push forward or risk being closed down.
The recent move by US policy maker in removing black liquor (material used in pulping) credits has resulted in price hike for KLB (Kraftlinerboard) across Europe and Middle East. Some believed that the price hike will eventually spread to Asia as well.
In view of the raising production cost of KLB after the removal black liquor credit, new contract price of KLB will increased substantially. As market reseach showed that with the current subsidies most of these pulp mills were only making a marginal profits. Thus, the sustainability of these mills depend very much on the success of future price hike. Similarly, the recent shutdown of containerboard mills by major corporate companies in US will further strengthen mills position in raising the price of KLB. However, the imports of Kraft Top Liners from Asia into US will give a challenge to domestic US mills in raising it prices.
With the removal black liquor subsidies, one may foresee that pulp prices ie USKP and BSKP will also raise to its next level. As such, there are more sentiments that indicate that future prices of KLB will be higher than current year prices. Similarly, one may also foresee that pulp substitutes (recovered paper) like Hard White Shavings and AOCC will escalate further from current prices.
The success of price hike for KLB is very much dependant on the followings
a. The demand for KLB in 1Q2010. At 4Q2009, we foresee that prices of KLB will maintain due to normal low demand season - low working days (Christmas & New Year) despite high in Unbleached Softwood Kraft Pulp prices. However, generally in Asia, business is slow in 1Q2010.
b. The price gap of the Asian Kraft Top versus KLB. At present, the price gap is substantial. However, with the continuous increased in USKP price, this may close the gap. Thus, price hike for KLB may be successful.
c. The new start up of a KLB mill in Australia in 4Q2009. The additional supplies may deter the price hike of KLB. At present, there are a substantial exports of Australian KLB to US.
d. The exchange rate of USD vs other major currencies. The continuou weakness in US Dollar may result in cheaper KLB even after the price hike of KLB
Based on the above sentiments, there is high possibility that the increased may not be successful. Nevertheless, US mills had no alternative but to push forward or risk being closed down.
Recovered Paper - Updates 12/11/09
Date : 12/11/2009
News on fire at a recovered paper warehouse of a major containerboard mill in China had raised concerned on prices of recovered paper. Many recovered packers had started to stock up or offered higher prices in anticipation of shortage in supply.
Similarly, major paper mills in Asian countries had started to watch closely at prices of recovered paper as many are worried that price will escalate to a higher level.
As a result, many are expecting the following scenarios.
a. Prices of finished product (containerboard) will raise due to cost pressure as a result of sudden raise in recovered paper prices.
b. Some Asian mills who are not buying (in negotiation with foreign packers) at current price level may starts to buy again. This may caused a snow ball in demand for recovered paper. Thus, prices of recovered paper may shot up again.
Nevertheless, if Asian mills are having sufficient recovered paper inventory and low demand season for packaging goods, the above will not materialise. It is still too early to say but let see in the next couple of days.
News on fire at a recovered paper warehouse of a major containerboard mill in China had raised concerned on prices of recovered paper. Many recovered packers had started to stock up or offered higher prices in anticipation of shortage in supply.
Similarly, major paper mills in Asian countries had started to watch closely at prices of recovered paper as many are worried that price will escalate to a higher level.
As a result, many are expecting the following scenarios.
a. Prices of finished product (containerboard) will raise due to cost pressure as a result of sudden raise in recovered paper prices.
b. Some Asian mills who are not buying (in negotiation with foreign packers) at current price level may starts to buy again. This may caused a snow ball in demand for recovered paper. Thus, prices of recovered paper may shot up again.
Nevertheless, if Asian mills are having sufficient recovered paper inventory and low demand season for packaging goods, the above will not materialise. It is still too early to say but let see in the next couple of days.
Saturday, November 7, 2009
Containerboard - Market Situation for Recovered Paper
Date - 7/11/2009
The availability of OCC (Old Corrugated Carton) for containerboard producers remained tight. Prices of OCC from various destinations (US,Europe & Japan) remained at high although it was lower than the peak last year.
The main reason for low availability was mainly attributed to low consumer spending in high purchasing power countries like Japan, US and Europe. As a result, lesser used boxes were generated over the last 3 quarters in 2009.
Most paper millers foresee that prices of recovered paper will continued to escalate further based on the following reasons
a. New Containerboard mills
In view of massive expansion of containerboard mills with the Asian region dominately by China, the demand for recovered paper will raise even further. These new mills had high capacity ranging from a quarter to half a million tons per annum.
As such, demand for OCC will continue to increase.
b. High price of USKP (unbleached softwood kraft pulp)
The continuous surge in USKP price also force containerboard mills to revert more to recovered paper as the prices between OCC and USKP had grown wider. Unless the prices of USKP soften, otherwise the paper millers will continue to substitute some of the USKP portion to OCC. Thus, demand for OCC will continue to surge.
With winter season around the corner, prices of USKP will continue to remain high as trees harvesting will be affected especially in Russia and Northern America.
c. Lagging effect
Despite some sign of improvement in demand for containerboard in 3Q2009, the recovery of OCC will lagged behind as the lead time from usage to collection will lagged behind by 1-3 months depending on the efficiency of the collection system.
Caution
Nevertheless, the sustainability of current OCC prices will very much dependant on the demand for Containerboard. As we know, demand for containerboard had weakened over the last 2 weeks (end Oct to early Nov) thus if demand continue to fall, paper millers will go for curtailment. As a result, demand for OCC weaken thus price of OCC will dropped again to its original level.
The availability of OCC (Old Corrugated Carton) for containerboard producers remained tight. Prices of OCC from various destinations (US,Europe & Japan) remained at high although it was lower than the peak last year.
The main reason for low availability was mainly attributed to low consumer spending in high purchasing power countries like Japan, US and Europe. As a result, lesser used boxes were generated over the last 3 quarters in 2009.
Most paper millers foresee that prices of recovered paper will continued to escalate further based on the following reasons
a. New Containerboard mills
In view of massive expansion of containerboard mills with the Asian region dominately by China, the demand for recovered paper will raise even further. These new mills had high capacity ranging from a quarter to half a million tons per annum.
As such, demand for OCC will continue to increase.
b. High price of USKP (unbleached softwood kraft pulp)
The continuous surge in USKP price also force containerboard mills to revert more to recovered paper as the prices between OCC and USKP had grown wider. Unless the prices of USKP soften, otherwise the paper millers will continue to substitute some of the USKP portion to OCC. Thus, demand for OCC will continue to surge.
With winter season around the corner, prices of USKP will continue to remain high as trees harvesting will be affected especially in Russia and Northern America.
c. Lagging effect
Despite some sign of improvement in demand for containerboard in 3Q2009, the recovery of OCC will lagged behind as the lead time from usage to collection will lagged behind by 1-3 months depending on the efficiency of the collection system.
Caution
Nevertheless, the sustainability of current OCC prices will very much dependant on the demand for Containerboard. As we know, demand for containerboard had weakened over the last 2 weeks (end Oct to early Nov) thus if demand continue to fall, paper millers will go for curtailment. As a result, demand for OCC weaken thus price of OCC will dropped again to its original level.
Friday, November 6, 2009
Containerboard Market Situation in 4Q2009 (Forecast)
Date :- 6/11/2009
Generally, demand for Containerboard (CT) had slowed down in the last 2 weeks. This situation seems to be common with most Asian countries except Japan. There were lots of price bargaining among the box plants and paper millers. The situation can be analysed based on the followings
Inventory level
Generally, most of the Asian box plants are having sufficient paper rolls inventory to last for another 6-8 weeks. The low inventory of 2-4 weeks in the last 3 months had changed dramatically with paper millers deliver their full back log orders. With comfortable stock level coupled with low demand season, most box plants prefer to buy only what they need. They are not in hurry and will continue to negotiate with paper miller for a discount. This will further dampened CT prices.
Paper prices
The present prices of Corrugating Medium (CM), Testliner (TL) and Kraft Top (KTL) are at the high level. These prices had reached the pre-global crisis level in 2008. Many box plants are expecting prices to dip in Dec 09 and Jan 2010. Thus, box plants will not buy but to run down their inventory.
Exchange rates
The recent strengthening of Asian currencies against US Dollars had caused imported prices from overseas mills within the Asian region to be cheaper. Thus, many box plants will wait for their domestic currencies to continue strengthening against the greenback.
Price weakening sentiments
Most box plants started to receive news from China market that price discount is given to gain order. Similarly, other mills from Korea and Taiwan who offered to Northern Asia (India, Bangladesh, Sri Lanka) had also started to relax the price offering subjected to further discount if huge volume can be placed.
Shorter delivery lead time
The lead time from overseas mills had also been shortened and is very apparent to the box plants that paper millers start to be hungry for order again.
Caution - high raw material cost and high oil prices for paper millers
However, a point worth to note is the continuous escalation of raw material cost (recovered paper and pulp) which will eventually pushes CT price upwards. This will eventually lead to another price jump which may caught most box plants by surprised. The high oil prices will also support current high prices. But at present, no one is at the position to dictate where the CT prices will be heading to.
Generally, demand for Containerboard (CT) had slowed down in the last 2 weeks. This situation seems to be common with most Asian countries except Japan. There were lots of price bargaining among the box plants and paper millers. The situation can be analysed based on the followings
Inventory level
Generally, most of the Asian box plants are having sufficient paper rolls inventory to last for another 6-8 weeks. The low inventory of 2-4 weeks in the last 3 months had changed dramatically with paper millers deliver their full back log orders. With comfortable stock level coupled with low demand season, most box plants prefer to buy only what they need. They are not in hurry and will continue to negotiate with paper miller for a discount. This will further dampened CT prices.
Paper prices
The present prices of Corrugating Medium (CM), Testliner (TL) and Kraft Top (KTL) are at the high level. These prices had reached the pre-global crisis level in 2008. Many box plants are expecting prices to dip in Dec 09 and Jan 2010. Thus, box plants will not buy but to run down their inventory.
Exchange rates
The recent strengthening of Asian currencies against US Dollars had caused imported prices from overseas mills within the Asian region to be cheaper. Thus, many box plants will wait for their domestic currencies to continue strengthening against the greenback.
Price weakening sentiments
Most box plants started to receive news from China market that price discount is given to gain order. Similarly, other mills from Korea and Taiwan who offered to Northern Asia (India, Bangladesh, Sri Lanka) had also started to relax the price offering subjected to further discount if huge volume can be placed.
Shorter delivery lead time
The lead time from overseas mills had also been shortened and is very apparent to the box plants that paper millers start to be hungry for order again.
Caution - high raw material cost and high oil prices for paper millers
However, a point worth to note is the continuous escalation of raw material cost (recovered paper and pulp) which will eventually pushes CT price upwards. This will eventually lead to another price jump which may caught most box plants by surprised. The high oil prices will also support current high prices. But at present, no one is at the position to dictate where the CT prices will be heading to.
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