Tag Archives: price increases

Paper industry news

Among all the developments in the Eurocrisis it is too easy to forget that there is lot happening in the paper industry as well. Some issues relate to the future of the industry, some to the current business model.

One such new development is the production of flexible graphite circuits, made from/on paper. This Finnish link states that it is unclear how and why graphite forms from cellulose, but in any case it could be a great development for intelligent paper and such applications.

Another interesting development, on a different scale, is a concept car made of biomaterials in a co-operation between UPM Kymmene and the Metropolia University of Applied Sciences. This link has some interviews with participants in the project. It would be great, a car that is biodegradable to a large extent!

In the category ‘Finnish forest industries are transforming into energy producers’ we have the news that UPM Kymmene wants to build up to 22 windmills in Paltamo. Currently, assessment of environmental impact is being carried out. The wind-power park would provide, depending on the final configuration, some 44-85 Megawatts.

In the same theme, two items that I missed: UPM did get EU support for a biofuel refinery (in France) while Stora Enso and Neste missed out on this.

Regarding prices, the IPW published news that two big players are increasing prices of specialty papers due to higher demand (Sappi and Ahstrom). If I have time, I should get back to the issue of pricing in pulp, paper, board and specialty paper.

And finally, the UPM Stracel sale has been finalized. I reported about this earlier, but these processes take their time. It is good to see that skilled personnal can still find good jobs – if there is a willingness to take a risk to invest.

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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.

US Paperboard tube and core price increases January 2013

In chronological order, Sonoco and the Newark Group announced a price increase for all paperboard tubes and cores by 4 percent for the US markets. Both producers refer to ‘inflationary inputs’ or ‘excalating external costs’ – among other things, the price of paperboard, which is again driven by price increases in pulp.

And again a price increase of soft-wood pulp!

Here. Södra Cell increase pulp prices.

 

The old price was $820 per tonne, now $840 per tonne. Markets must be good. But – I have not seen many other companies inform about price increases. Maybe Metsä Fibre will follow again. There are many more pulp mills in Europe and the world, and although it does seem there is still increased demand from Asia for (also) European pulp, it is a question whether buyers are willing to pay this new price. The PIX NBSK pulp index shows that the price of NBSK pulp might be upwards trending, but an index price of around 805 dollars/tonne is quite far from the 840 dollars Södra asks.

One can ask different questions about this price increase: is it a premium on the excellent quality of the pulp, or is the market so tight that for reasons of supply the price increase is warranted? In that case, why don’t all pulp producers follow? I don’t know, but I am interested in the answer!