Reply from Rod Young at RISII'm glad he answered my email, but I'm not too happy with the response:
Variable costs for the new Chinese capacity are probably $800-$1000/tonne, with full costs, including capital, probably $200/tonne higher. There is way too much capacity being started in the DP market and demand/capacity will plummet by the end of this year. Our estimate is that the variable costs of viscose pulp delivered to main port China for an average producer is around $800/tonne and it is highly likely that viscose prices will drop to that level sometime next year due to the overcapacity. I would say a better range for viscose pulp prices will be $800-$1400/tonne. I'm not going to comment on Mr. Wasilenkoff's knowledge base.
I don't know what your budget is for following this market, but I publish a quarterly monitor of the DP market that is priced at $4,900 per year. It has quite a bit of detail on the market, including a two-year price forecast on a quarterly basis.
Rod
I know FTP has long term contracts, I just hope they can be reinforced if prices do drop.
I'm sorry for posting bearish news as of late, but I try to keep an objective eye on my investment. I tend to trust RISI, or else they would not charge 5000$ per year for their research.
I might try to get in on the upcoming conference call to ask FTP's view on this current oversupply situation happening in China.