Thursday, April 15, 2010

Increased Pulp Prices Could Hurt Global Paper Industry

Although the vast majority of USA paper producers are integrated (produce pulp on site), the smaller mills must purchase fiber at market pricing. In contrast, nearly all of the European and Asian paper producers are non integrated and must buy pulp. This model, over the past several years, with depressed pulp prices, has been advantageous. However, with the current aggressive price increases, the non integrated mills are experiencing dynamic cost increases. Also, the foreign mills must also contend with the stronger US Dollar.
Two large USA mills to watch that buy fiber include Wausau and NewPage. Clearly, without the support of the black liquor credit and, now, fiber increases, their margins will be under pressure.

2 comments:

Anonymous said...

Agree, agree. agree. As pulp price increases - whether an integrated mill or not - the price of paper will also increase.

Anonymous said...

Yes, if pulp cost increases, the manufacturers will have to increase the price of paper. Even the integrated mills 'charge ' the paper mill at market price - so, the increase effects all manufacturers.