RE: Firming of NBSK pricingVery lonely here. Kinda summarizes the volume on FBK too. Not much interest. That is the bad news if you are fully invested already. Good news if you are still adding. The good news is also that FBK should becoming stronger and stronger financially as each day passes at NBSK over $850/mt.
As all holders know, NBSK Pulp pricing is the single largest variable that determines FBK's financial fortunes or as we saw in 2008 and 2009, their slow demise. The good news is that they survived, didn't miss any debt payments and were able to refinance earlier this year and have significantly paid down their debt.
Forward looking pulp pricing, after the past 12 months rebound in pulp pricing, has been largely expected to fall in late 2010 and into 2011 but it was difficult to see how much the demand was going to fall. Now that we are into late 2010, more and more analysts are starting to believe that the expectation of a significantly lower future price was overblown and that future pricing should be stable and could perhaps even rise based mostly on the growth of demand from emerging economies like China and India.
Here is a good story by Dave Hillman, well known industry analyst.
https://www.glgroup.com/News/Market-Pulp-Prices-To-Remain-Stable-51747.html
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Analysis
China continues to be themajor market driver for all grades of market pulp from UnbleachedSoftwood (for containers) to Dissolving Pulp (for rayon). India isexpanding its papermaking capacity with huge paper machines which willconsume major amounts of pulp...
Dave Hillman background
Dave Hillman is an Independent Consultant providing consulting servicesto market pulp producers and producers of coated and uncoated papers.During the past 22 years, Mr. Hillman has become internationallyrecognized for his papermaking, sales and marketing expertise. Hisindustry experience includes market pulp Sales Manager for Hammermill,VP-Technical Sales-Woodpulp International, various production, technicaland product development positions with Westvaco. Mr. Hillman hasconducted over 100 in-plant seminars for companies in the US, Mexico,Canada, Chile, Brazil, South Africa and throughout Europe and has spokenat numerous conferences and world pulp congresses. He is a co-author of"The World of Market Pulp", the industry's reference book on theworld's most distinctive market pulps. Mr. Hillman is well acquaintedwith SFI (Sustainable Forest Initiative) and the various products fromtrees - dimension lumber, wood pulp chips, pellets, biofuels andcellulose based ethanol.
Another article on pulp from Dave Hillman
https://www.glgroup.com/News/NBSK-Market-Pulp-Prices-Stabilize-in-October-51171.html
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Traditionally global demand has increased about 5%/year which amountsto about 2.75 million mt or the equivalent of two world class marketpulp mills. With no new capacity coming on stream in the next 12-18months it could be assumed any overhang in capacity willsoon disappear. Just the new tissue/toweling machines which havestarted up in many countries will consume much of the surplus...