Pulp will have less space to transfer pricing

After the global pulp industry have found support for three price adjustments in early 2013, the occurrence of maintenance stops in different factories, combined with the expectation of lower speed at the start-up of new production projects, you will be able to sustain a moderate uptrend of the raw materials in the coming months.
The scenario, however, should not remain sunny for the sector by the end of the year. Although there is room for a possible new round of increases until the third quarter, the pressure on producers will grow as we approach the date of inauguration of two new factories, both in South America-and the effective application of the adjustments will depend on the relationship between the pace of operation of new lines and closing capabilities.
On the latest rate increase, of $ 30 per ton from May 1st in all three reference markets, market comments indicate that producers already would have found difficult to full implementation. The industry, in turn, reiterated that will play, gradually, 100% of the increase.
In short fiber segment, a specialty of Brazilian producer, 2013 increases led the reference price in North America to $ 900 per tonne. In Europe, the price came to $ 850 per tonne, in Asia, the $ 750 a ton, at levels higher than the previously estimated by industry.
Announced with more advance than the usual, this third announcement was seen as "aggressive" by analysts who follow the industry and would have found more resistance in Europe. One of the factors that hampered the plans of producers was the continuity of operation of Södra Cell Tofte, one of the largest suppliers of Chemical pulp of Norway. The Södra had indicated that would terminate the activities of the factory in may, before the failure of the sale of the asset. According to the Finnish consulting Foex, however, the unit will follow in activity until at least mid-June.
At the same time kept the factory in operation – and therefore did not contribute to reducing the global supply of the raw material, the Södra announced at the end of April a new readjustment, which amounted to $ 890 a ton of long fiber on the European market from May 1. According to the company, the increase was due to the reduction of global stocks of long-fiber pulp.
The addition of new capabilities, Montes del Plata, a joint venture between Stora Enso and Arauco in Uruguay, must finally start the production of short-fiber pulp in the third quarter, just beyond the period originally provided for. However, the unit should only reach rate of 100% of the installed capacity of 1.3 million tons per year, in the second half of 2014, which indicates that their arrival to the market will be smoother than expected.
In the fourth quarter, it is the turn of Suzano Papel e Celulose start operations of the Empress (MA). With a production capacity of 1.5 million tons per year, the unit also must achieve 100% pace in 2014, so that pulp prices should be under increasing pressure. Given this, it is likely that the producers of raw material use to "pull" the reference prices until the third quarter, or at the latest by the end of the year, before the inevitable period of oversupply.