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FOEX MARKET COMMENTS JANUARY 18,
2005 (go directly to FOEX Website - here)
Very
mixed signals have come in from the
US
economy, most, but not all of them, rather positive. Inflation for December
showed a drop with energy prices falling and inflation rate was up only 0.1%
also without oil. The US
trade balance hit the new, all-time high monthly deficit of 60 billion USD
and this at a period of a weak dollar. But, business confidence indexes are
up, industrial production moved 0.8% higher in December and the capacity
utilization number hit the 4-year high. Number of new jobs and hiring plans
were both up, too. In
Europe, ECB kept, as expected, the interest rates unchanged. Inflation is
heading down with core inflation on its way from 2% towards 1.5%, and thus
now below ECB’s threshold level. EU commission raised their Q1 GDP growth
estimate marginally. Still, the GDP growth outlook for 2005 is quite low, 2%
at best. Negotiations over the changes in the Growth and Stability Pact
begin this week. In
Asia, the worrying news is that the trade volumes appear to be heading down.
In most countries, with a notable exception of
China
, there are fairly clear indications of such a deceleration since 2-3 months.
China, however, had their biggest monthly trade surplus in December. Also in
Japan, the trade surplus has shrunk and the economic growth rate has fallen
substantially from the mini-boom of the early 2004. Structural changes are
hoped to turn the trend by about mid 2005. A revaluation in
China
would go a long way of helping Japan. The probability of a modest Yuan
appreciation is rising. (Jan.18)
Very
limited data is available over the pulp and paper industry performance in
December. In the
US, the demand growth flattened for several grades of paper towards the end
of the year, including the packaging sector and uncoated woodfrees. Most
analysts assume that December numbers continued that same recent trend. Low
inventories in many sectors help the paper industry to resume higher growth
if, economic growth continues to be robust over the 1st half of
2005. In
Europe the end of the year mood was more bullish than in the
US, in spite of the burden of the strong Euro. Annual growth rates in 2004
over 2003 will be high, even if December growth may have been more modest,
as indicated by the small drop in the Utipulp’s pulp consumption data over
December 2003. Price increases are attempted on most key grades of paper.
The negotiations appear to be proceeding slowly with the suppliers taking a
tough stance over the need of an upward move after the fall of prices in
both 2003 and 2004.
(Jan.18)
Pulp
market has remained tight. Supply cuts continued as yet another mill in
North America (
Samoa
) was closed, at least temporarily. Global market pulp demand growth will
end up most probably at 4-5% for BSKP and 6.5-7.5% for BHKP in 2004 over
2003. Inventory positions in
Asia
appear lower than earlier perceived by some observers and buying activity is
good with a cyclical slowdown approaching during the Chinese New Year
celebrations. Prices in Asia
have moved up 10-30 dollars/ton, depending on the market and the grade. BHKP
balance has firmed up more than the softwood and some narrowing of the price
gap between softwood and hardwood has been seen in
Asia
. In
Europe, port stocks, which typically go up substantially in December, came
down this year by 8000 tons. On the other hand, Utipulp reported that the
consumer stocks had risen.Both
in North America and in
Europe, the announced price increases have gone or appear to be going
through. New increase announcements for February at USD 660 have just been
made. In
Europe, NBSKP prices announced for January shipments are either at 630 or
640 USD/ton CIF/Western Europe. Quotes received for our NBSKP index ranged
from 620-640 with 630 as the most common quote. PIX benchmark
closed at 628.12 USD/ton, 3.8 USD/ton, or 0.6%, up from last week.
The USD strengthened against the Euro, this time by 0.8%. The NBSKP
Euro-value ended - after conversion - at EUR 479.81/ton, an increase of 6.8
EUR/ton, or 1.45%, from the previous week. (Jan.18)
In
BHKP, price increases announced from the turn of the year are typically to
550 USD for eucalyptus pulp. Demand has been good in Asia, Europe and
recently also in
North America
as the permanent or temporary closures of several lines have increased the
market pulp needs of the partially integrated companies. BHKP quotes
received ranged from 520 to 550 USD, with and increasing number of them
already at 550 USD/ton. Prices reported in Euro ranged for most of the sales
now from 400 to 415 with 410 as the most common quote. The USD strengthened
by 0.8% against Euro. Euro 410 converted to 537 USD/ton. Average from the
USD-quotes alone was USD 537.79, up by USD 7.2/ton or 1.4% from the previous
week. Average of the quotes in Euro alone was 409.64, up by 4.2 Euro/ton or
1.0% from the previous week. Together with the currency impact, the official
bench
mark
in Euro increased by nearly 8 EUR/ton, or 2.0%, to 410.46 EUR/ton.
Converting this into USD meant, with the weaker Euro, an increase of USD 6.0
USD/ton or 1.1%, to 537.33 USD/ton. (Jan.18)
In
newsprint, the last months of 2004 showed good volumes in Europe
whilst US demand declined. Specialities were doing particularly well. High
capacity utilization rates, rising costs and price declines in 2003-2004
have prompted price increase attempts in the vicinity of 10%, varying a
little on the specific grade, producer and market. Negotiations appear to be
proceeding slowly. As there are still order books left at 2004 prices,
shipments at new prices are not taking place yet and are not part of our
benchmark either. Quotes received remained thus largely unchanged. Euro
weakened again marginally – or by about 0.2% - against the weighted
non-EMU basket. This led to a small currency-related increase in the
PIX
newsprint benchmark. The index closed at EUR 465.89, up from the previous
week by 15 cents/ton, or 0.03%. (Jan.18)
For
coated mechanical reels, December statistics are not out yet but for the
first 11 months, at least, the shipping volumes were good and capacity
utilization rates higher than predicted in the beginning of last year.
Inventories at consuming end appear to be below average. In
spite of the good demand, price increases announced for Q4 did not go
through. A new attempt to raise prices from the turn of the year is under
way. With order books left from the 2004 sales, most of the price quotes
received for our LWC index were still at old prices and thus mainly
unchanged. However, those changes which were reported were upwards. The
small weakening of the Euro against non-EMU currencies helped the benchmark
further north. The index closed at 674.81 EUR/ton, 2.5 EUR/ton, or 0.4%, up
from last week. (Jan.18)
In
coated woodfree grades, the shipments were very strong in September-November.
Numbers for December are not out yet. The announced price increases in
Europe
for Q4 led only to a very limited upward movement. New price increases of 5%
or more are being attempted at present. Both upward and downward changes
were seen in the quotes received with increases being again more numerous.
The benchmark was helped upwards by the modest push from the 0.2% weakening
of the Euro against the weighted basket of the non-EMU currencies. The index
closed at EUR 711.70/ton, up by 2 EUR/ton or 0.3% from the previous week. (Jan.18)
In
uncoated woodfrees the demand increase towards the end of the year was
stronger than in the early part of the year. Even so, the uncoated woodfree
market shows less strength than the coated grades. With some import pressure
from Eastern Europe, Asia and
Latin America, the pricing environment has been disappointing from the
producers’ point-of-view. For our B-copy benchmark, changes were once
again seen both downwards and upwards. The weakening of the Euro provided a
small upward push but it was too small to counterbalance the impact of the
lower quotes. The index fell by modest 64 cents/ton, or 0.08%, closing at
EUR 803.44/ton. (Jan.18)
The
US
shipment numbers for containerboard showed the growth slowing down during Q4
2004 and the inventories headed upwards. In Europe, demand has kept growing
but the production capacity is growing as well. The sluggishness of the
economic growth in the old EU does not help, but the good growth in the
recently joined member countries helps the total European demand. Price
increases in
Europe
went partially through during Q4 but now, entering January the momentum has
stopped. Strengthening of the USD against Euro by 0.8% last week and a
modest 0.2% weakening of the Euro against the basket of the non-EMU
currencies helped the indexes upward.In
the price quotes received, very few changes were seen this time. The
kraftliner benchmark inched up by 22 cents/ton (or 0.05%) closing at EUR
455.93/ton. The
PIX
Testliner 2 index also gained but only minimal 7 cents/ton (or 0.02%) ending
at EUR 353.00/ton. The
PIX
RB Fluting crept upwards by 21 cents/ton (or 0.07%) and closed at EUR
318.82/ton. (Jan.18)
Utipulp, European pulp consumer December
figures; inventory 1.248 million tons, in days 31,up from November figure of
1.174 million tons by 74 000 tons or 6.3%, down by 3.3% from December
2003. Consumption in December 1.099 million tons, down by 104 000 tons or
8.6% from November figure of 1.203 million tons, 2.4% below December 2003
level. (Jan.17)
US
newsprint shipments weakened in 2004 against 2003 volumes throughout the
year, however less in latter part of the year than in the earlier months.
But, the supply has also been reduced and as inventories are below long-term
average, new price increase attempts (+35 USD/ton) appear to be at least
partly successful. Most of the quotes received remained unchanged from the
previous week. Among those changed, there were more upward than downward
changes. Our
PIX
US Newsprint bench
mark
ended at USD 553.66/ton, up by 2.9 USD/ton, or 0.5%, from the previous week.
(Jan.11)
In
North America, the pulp price increase to 650 USD/ton for NBSKP has now gone
fully through. Some announcements to 680 USD/ton for NBSKP have also been
made but a very large majority of the quotes is at 650 for the time being,
at least. Shipments of market BSKP for the NA market, helped by the
increased demand from partially integrated units, were up over 25% in
November and are up by more than 6% year-to-date. For our index, several of
the quotes received were up from the previous week. After eliminating from
the quotes received the top 10% and the bottom 10%, according to our system,
our PIX
US NBSKP
benchmark ended at 650.00 USD/ton, up. This is up by 3.4USD/ton, or 0.5%
from the previous week.
(Jan.11)
Europulp inventories at ports decreased in
December by 8 000 tons or by 0.5% from November inventories of 1.469 million
tons to 1.461 million tons, 6.6% below December 2003 inventory.
(Jan.10)
Global chemical paper grade market pulp
shipments decreased in November from October to 3.113 million tons or 7.2%
but were 8.4% up from November 2003. Inventory data in days of consumption
is calculated from the average daily deliveries over the past three months.
Inventories at the end of November were 34 days, down 1 day from end
October. 34 days means an inventory
within the range of 3.505 - 3.605 million tons. Comparison to the October
number or end November 2003 value is not available as inventory volume is
not a precise figure. (Dec.22)
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