Pulp imports to China increased 108.5%

November 30, 2009 by timbercommunity

Danske Bank analysis of the forest market in the December issue:

Sawn timber
• Price increases have slowed down

Timber and Pulpwood
• Higher prices in central Sweden
• pulp mills are free-riding at sawmills

KNOWN PROFILES gives their views on the Timber market
• Santhe Dahl CEO of Vida AB
"Stable timber market in Europe, positive in North Africa, negative in Japan and the United States. "

• Ulf Larsson, President of SCA Forest Products:
"We are running at full speed in sawmills and expect slightly rising prices at quality wood products "

PULP MARKET
• Minimum mass storage in 10 years
• The consumption of pulp in China increased with 100% over the past year

INTEREST & FOREIGN EXCHANGE
• The Euro is back at 9.60 compared with the Swedish crown within a year

Timber Rally in Southern Sweden!
Timber market in southern Sweden is hot and it depends on sawmills. A price rally due to unexpectedly strong demand for wood products in combination with low level of logging. Rates for (Rotposterna) are now paid in the range from 375 to 475 Swedish crowns/m3sk.  This corresponds to a price per m3to at 750-950 Swedish crowns which is an increase of about 40% since summer.

Sawn goods
Timber market is now in a phase in which the consumption of the main markets is low and non-increasing level. At the same time Swedish sawmills gradually succeeded in raising prices in autumn. The reasons are explained though less competition from Finland, Russia, Germany and Baltic because of raw material problems combined with the weak Swedish crown.

Wood products
The market is basically stable, with low warehouse where we benefit from our location in the taiga belt with fine qualities of both pine and spruce. We drive for full of sawmills and expects weak growth Prices for both spruce pine in the quality segments.

Pulp Market
Teemu Salonen forestry analyst at Investment Research, Danske Markets Equities:
Stocks lowest in 10 years ensure price increases

In the short term it looks very positive for pulp prices but in six months  the futures market indicates a reduction.
Softwood pulp producers announced an increase of $ 40 per tonne and November looks to be the seventh consecutive month of increased pulp prices Europe. Price increases have been made possible by low inventory levels and reduced industrial capacity in the U.S.
combined with the most important factor, a huge demand from China.

The American pulpmills runs max production to benefit from the special biofuel subsidies which are valid until the end of this year. Here
is of course a risk that the demand for the Chinese pulp. For once again we have seen the largest annual increase in pulp imports to China with an increase of 108.5% from unimaginable Sept 2008 to Sept 2009th. A period of rest of the world have seen the worst
recession since the 1930s.

Currency
The price target for the Swedish crown in 12 months against:

• EUR 9.6
  
• U.S. $ 6.62
• GBP is 12.00.