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US pulp spot market prices continue to climb in softwood and hardwood kraft, with domestic shipment delays becoming commonplace and buyers pulling for additional tonnes outside of contracts, industry contacts told Fastmarkets.
Benchmark northern bleached softwood kraft (NBSK) posted the biggest increase across four grades tracked by Fastmarkets, surging $25 per tonne to $800-830 per tonne net delivered to the US East and Midwest, through January 28. Shipment and logistical shortfalls are driving prices up rather than low inventories, market participants said.
“The big challenge is logistics. Pulp is there, so you’d think that since supply is there the price won’t go up, but you can’t get it delivered,” said an NBSK buyer contact regarding a dearth of on-time shipments. “Rail and trucking is a disaster. That part (of the supply chain) is driving the increase, not supply and demand.”
Final January US NBSK effective list prices were flat at $1,450 per tonne, according to Fastmarkets’ PPI Pulp & Paper Week (P&PW). Flat contract prices and rising spot prices dropped average spot levels to about 44% below the list.
While that’s down from 45.5% two weeks ago and well below the 48% delta recorded before spot markets began rising in early December, buyers remain convinced that it’s above a level that signals contract price momentum. In rising commodity markets, spot prices typically surge above regular contract ones, sources note, and that’s not yet the case outside of hefty premiums some buyers paid to get ‘emergency tonnes’ shipped quickly – especially when choosing expensive trucking routes in lieu of railroads.
Southern bleached softwood kraft (SBSK) increased to $780-810 per tonne net delivered, up $20 per tonne. Spot SBSK supplies have dipped amid a surging global fluff pulp market because producers in the US South are favoring it due to high prices in domestic and offshore markets.
US bleached hardwood kraft (BHK) spot markets surged and the spreads between the highest and lowest prices widened on an array of deals across the Northeast, South, and Midwest. Northern bleached hardwood kraft (NBHK) has become “almost a specialty grade,” said a producer contact, because printing/writing (P/W) papermakers covet it for end products that are short in supply and high in price.
US BHK spot market prices increased to $710-750 per tonne net delivered through January 28, up $20 per tonne, according to P&PW. Final US BHK January effective list prices held flat at $1,245 per tonne, which left spot BHK prices averaging about 41.5% below effective list prices.
While P/W papermakers are paying significantly more for domestic BHK, tissue makers that can also consume imported bleached eucalyptus kraft (BEK) aren’t because they swing to more BEK consumption. Tissue sector buyers can still get imported BEK below $700 net delivered, which is helping them fight against sharp increases in domestic BHK, according to market participants.
Effective January 2016, Fastmarkets merged separate indices for northern bleached hardwood kraft (NBHK) and southern bleached hardwood kraft (SBHK) into one index.