Mr. Dave Hillman

GLG News by Mr. Dave Hillman, Independent Consultant

GLG News is now G+ Insights

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Acetate Dissolving Market Pulp Is Booming!

October 19, 2010

China, Indonesia and India are leading the surge in demand for the acetate dissolving pulp from which rayon fabric is produced. Spot prices in the 2Q were at $1600/admt vs. a list of about $1150-1250/admt. In the 3Q list prices were raised to $1350/admt. Now rumor has it that producers will announce a whopping $200/admt price hike on January 1st to bring the list up to $1550.The former Canadian NBHK mill, Thurso, has restarted and is upgrading to dissolving pulp...and is already 75% sold.

Chinese Pulp Buyers Fail To Drive Down Prices

October 8, 2010

The 3Q is traditionally the slowest in the year since northern European paper mills go on holiday in July with southern European mills going on holiday in August. This significantly reduces global pulp demand. Having built up good inventories Chinese buyers joined to greatly reduce purchases in an effort to significantly reduce pulp prices. Purchases were down 39.3% last quarter. Only a few NBSK producers announced price reductions of $20/admt.Now the Chinese have again started buying.

APP Thru IGIC Purchases Woodland, ME NBHK Mill

October 5, 2010

Asia Pulp & Paper, to feed its growing appetite for market pulp has had its subsidiary International Grand Investment Corp, purchase the 395,000mt/year NBHK at Woodland, ME (located directly on the coast) known for its high quality high maple hardwood, This follows IGIC's February purchase of the NBSK and UBK mill at Halsey, OR (also on the water). APP previously purchased the Canadian BCTMP mill at MeadowLake and the Harmac, BC NBSK mill formerly owned by P&T.

Canfor Drops NBSK $20/admt In October

September 30, 2010

After a long period of price increases NBSK has dropped for the 2nd time.The first decline was $50/admt dropping the list to $990/admt, now this $20/admt will further reduce the list price to $970/admt for shipments delivered to N.A. customers.This was brought on by a rise in producer inventories of 5 days worldwide (World 20).None of the other NBSK producers have followed suit so far. It may be they all are more optimistic about the prospects of a 4Q upturn....which is traditional.

Clearwater to Purchase Cellu-Tissue

September 21, 2010

Analysis of:Clearwater Paper To Acquire Cellu-Tissue For $502 Milion | www.paperage.com

For $502 million Clearwater has extended its manufacturing presence to the eastern and southern parts of the US. The financing was arranged by BoA-Merrill Lynch.Clearwater, with mills in AK, Las Vegas and ID plus a converting plant in the upper midwest, recently announced plans to install a tissue machine and converting equipment in Shelby, NC. Cellu-Tissue is known for it's specialty tissue products. Expected beneficial synergies by 2012 could amount to $15-20 million.

Fluff Pulp: the US's Jewel In The Crown

September 17, 2010

Fluff Pulp is making a major contribution to the US's export situation and is growing by about 6%/year. World demand is 5.4 million mt/year and the US has as much as 95% of this amount. Prices have remained steady even while other papergrades pulps have decreased. Current list for Fluff Pulp is $1040/admt. After inland and ocean freight the mill net for export tonnage is over $900/mt. Assuming half is exported, the numbers are: 2.6 million mt x $900 = $2.34 billion

Hardwood Pulp Prices Projected To Drop In 4Q

September 17, 2010

Three northern hardwood mills have begun selling into the spot market which has driven down prices. They are Domtar's Woodland, ME mill, NewPage's Rumford, ME mill and Thurso in Canada. This may be short lived.The current list for NBHK is $905/admt but pessimists believe by year end it may be $825/admt. Optimists think it will slide only to $850/admt,New UFS, CFS, Tissue and Towelling machines will be starting up over the next six months and should take up any surplus.

Paper Industry Capital Spending Up 8% in North America

September 8, 2010

+8% is good news but the paper industry will spend 23% less than in 2008.Paper and board production hit a 20 year low in 2009 but rebounded and rose 9% in the first half of 2010. Worst hit in 2009 was graphic papers.No new pulp mills or paper machines are planned. Money will be spent on maintenance, renewable energy, bio-mass projects, upgrades and conversions.Four of the biggest spenders are involved in containerboard and packaging: IP, TIP, PCA and Cascades.

China Is Now Top Energy Consumer - But Not Proud Of It!

September 8, 2010

The Gov't will close 259 straw pulp and smaller paper mills before year's end These are older, smaller, less efficient mills and heavy polluters. Reducing domestic production of pulp means greater purchases of market pulp - eucalyptus and acacia mostly from Indonesia, Chile, Brazil and Uruguay. Only one greenfield market pulp mill is currently under construction. 2011 should see a tight pulp market and rising prices.

US Printing/Writing Papers Shipments UP Slightly in July

August 25, 2010

Analysis of:U.S.Printing-Writing Papers Shipments Up Slightly in July | www.paperage.com

Contrary to what many IQ projections indicated, total printing & writing shipments increased 1% in July instead of declining 2-3%. , Paper inventory levels increased 3% from June 2010 possibly indicating optimism that 3 and 4Q business will improve.Uncoated free sheet (UFS) ytd exceeded 2009 ytd.Coated free sheet (CFS) increased year-over-year for the 9th consecutive monthCoated mechanical (CM) showed double-digit growth vs. year ago.Uncoated mechanical (UM) shipments up seventh month in a row

Newsprint Prices Continue Upward Climb (but so do costs)

August 24, 2010

Analysis of:Newsprint Prices Continue Climb, But Margins Still Tight | www.paperage.com

Newsprint prices rose in August for the 12th consecutive month - now $640/mt in the East and $590/mt in the West. To close this price gap Norpac, White Birch & Blue Heron all announced a $40/mt price increase for September.Unfortunately most costs have also increased so that even with the 45% price increase, mills like Abitibi indicated they lost $64/mt in 2Q.Producers are looking at export markets where demand is growing. They are also diversifying into lightweight Kraft pkg grades.

Fibria Moves Ahead To Reduce Future BEK Shortage

August 23, 2010

Analysis of:Fibria acceleerates preparations for startup of Tres Lagoas II unit in Brazil | www.risiinfo.com

The Tres Lagoas II mill was not projected to start up until 2016 but has been moved up two years to 2014. This is obviously in response to the impending Eucalyptus shortage which will occur as huge new CFS and UFS paper machines start up in China and India.This expanded mill will, in 2014, have a potential capacity of 1.75 million mt/year.150,000 hectares of planted forests will be needed (360,000 acres) but the company already has a 30,000 hectare surplus in planted trees from Unit I

Pulp Sags $30-50/admt But The 4Q May Bring Recovery

August 18, 2010

After 12 monthly price increases (out of 14 consecutive month) NBSK topped out at $1020-1040/admt. Now prices have declined by $30-50 for many Canadian mills. Although Arauco (Radiata Pine) and Canfor only reduced their prices $20/admt.Many producers said global demand is still strong.The summer months are traditionally the slowest because of widespread vacations.It's the perfect time to draw down on inventories.The 4Q historically been the busiest and now inventories may have to be rebuilt.

Fluff Pulp Producers Have Cause For Rejoicing

August 12, 2010

The current global situation is indeed rosy! (1)Domestic prices are firm at $1040-1060/admt, (2)the market is projected to increase 6-7%/year as new diaper (nappy) plants begin operating every week of the year in emerging markets in Asia, the Middle East and Latin America, (3)prices have held firm and withstood the drop experienced by NBSK, NBHK, BEK and SBSK/SBHK, and, (4) the US enjoys 90-95% of the global market. Added to these 4 is the fact that only the SE part of the US has Slash Pine.

Indian & Chinese Entrepreneurs Bullish About Future

August 9, 2010

The paper industry will grow in proportion to (a)population growth, (b) the economy and (c) the growth of the middle class. Many think (c) to be the most influential.Both countries have bullish enterprising classes and this bodes well for the pulp and paper industry in these countries. In each country the majority of entrepreneurs believe their societies are more welcoming of entrepreneurial activity today than 10 years ago.Both countries at present have very low paper consumption per person.

Russia Continues Pulp/Paper/Board Expansion

August 3, 2010

Analysis of:Ilim Group Pulp,Paper Production Up 8% in First Half of 2010 | www.paperage.com

Russia's pulp/paper industry for many years was inefficient and woefully behind the times. Int'l Paper invested US$500 million to purchase 50% of Ilim to form Ilim Holdings. They recently announced a $700 million expansion of the Bratsk market pulp mill and now have announced a new paper machine for the Arkhangelsk Oblast mill in Koryazhma.Pulp/Paper production was up 8% in the first half of 2010770,000 mt of market pulp was produced and 340,000mt of board.

Canadian Pulp Producers Face Rough 3rd Quarter

July 20, 2010

The Canadian pulp mills already face an unsatisfactory currency exchange (a number of forecasts years ago used a rate of .80/US$) and high energy, labor, chemical and transportation costs. Now, added to this is the slump in housing that has caused some sawmills to shut down for lack of business or because a 2 x 4" price of $214/thousand board feet is not profitable. This means no chips for the pulp mills.Now prices are coming down. NBSK on the spot market is as low as $845/admt.

Paper Excellence (APP/Sinar Mas) Purchases Howe Sound, BC Mill

July 19, 2010

Analysis of:Paper Excellence Buys Sruggling Howe Sound Mill | www.reuters.com

Having previously purchased two pulp mills in France from Tembec and the former Pope & Talbot mill at Harmac, BC, Paper Excellence (headquartered in the Netherlands) has purchased the 400,000 mt/year NBSK mill from Canfor & Oji.This mill also produces newsprint and mechanical specialties.Howe Sound is a high cost mill which has been plagued with high debt.Paper Excellence now has two NBSK mills located on Vancouver Island - ideally located for shipments to APP's many Chinese mills.

Market Pulp Producers Now Lower List Prices

July 14, 2010

Analysis of:Market Pulp Prices Backing Off as Supply Grows, Demand Slows | www.paperage.com

Following a reduction in spot (non-contract) prices, Arauco in Chile has cut list prices $40-50/admt on all grades (BEK and Radiata Pine). A Russian producer supposedly cut their prices even more. In early July NBSK spot prices fell 12% off June's list prices to $870-920/admt. List prices on NBSK had been as high as $1050/admt.The question is: how quickly will other global producers react? Some high cost mills who no longer have the black liquor tax credit may be reluctant to cut prices.

Pulp Spot Prices Decline As Many Expected

July 12, 2010

Market Pulp prices have been increasing monthly since May, 2009 and all grades have been in short supply. 90% of a mill's tonnage was under contract.Spot prices were running $50/admt over list but now have dropped below list.Customer inventories are high and European paper mills are taking one month shut downs for vacations.Traditionally the 3rd quarter is always the softest.Consequently, it should come as no surprise that spot prices are falling.

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