No pulp fiction – rising prices and a stop to deforestation in Indonesia

This article tells about the increases of prices in various grades of pulp , notably NBSK and BEK. As I have written before, pulp prices have seen quite a lot of action recently – usually mentioned in the context of increasing demand from China/Asia. Obviously this could at a more local scale also be related to rising demand in carton/paperboard, which is needed for packaging all those products that come from China. It is in any case clear, that pulp and paperboard do fairly well, and paper is just in a very weak position, as e.g. Stora Enso also mentioned.

But for me as a sociologist it is interesting to see what language is used here in the article: ‘pushing through mark-ups’, ‘getting prices accepted’ etc. Of course, you can frame this in a supply-and-demand setting, but with this product, pulp, it seems so that prices are (at the moment at least) determined by producers and then kind of settled through negotiations of orders with clients, which in the end lead to contracts. That mechanism is quite a far cry from what microeconomics teaches us, although from a different perspective it can still be said that there are movements to find a new equilibrum. But ‘word has it that even additional volumes were ordered in some cases’ – which would seem incompatible with the usual story of supply and demand (as in: the higher the price, the less demand). This is definitely an interesting case.

 

On a wholly other issue, I read from a Dutch newspaper that APP (Asia Pulp and Paper) has announced that it stops using tropical wood from Sumatra, Indonesia for pulp production. The company has been under intense pressure by organization such as Greenpeace, but probably more decisive has been the decision by companies such as Kraft and Unilever not to order APP’s products. But in any case, good news for the fragile rainforests of Indonesia.

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