IN ASIA, PRICE OF UNCOATED WOODFREE PAPER STILL EXPERIENCING PRESSURE

           Information received by Indonesia Pulp and Paper Association (APKI) from various sources stated that in Asia, especially in China, price of Uncoated Woodfree (UWF) paper distill experiencing pressure, even though price decrease has been slowing down. Price decrease is due to oversupply. In China, price of UWF paper decreases from RMB 6,000/ton in September 2011 to RMB 5,700/ton in October 2011. While, price of Coated Woodfree (CWF) paper also decreases from RMB 6,200/ton in September 2011 to RMB 5,700/ton in October 2011 and to RMB 5,500/ton in November 2011.

            Ir. H, Mansur, Head of APKI Presidium, told Business News that in North America in October 2011, demand for UWF paper is stable at 1.9 million tons. But, it is lower than in October 2011. In October 2011, paper factories operate 89 % of installed capacity, but are able to sell 92 % of the utilized capacity, Therefore, paper factories have successful in controlling their production, which has a further implication on stability of paper price, and/or paper price tends to increase.

            In October 2011, demand for mechanical UWF paper is 9.5 % lower than in October 2011. Sales also decline due to limited supply as a result of closing down of Port Hawkesbury factory that has a capacity of 375,000 tons/year, and cease of operation of 2 paper machineries in Sartell factory with a capacity of 95,000 tons/year.

            In October 2011, demand for UWF paper is stable at 758,000 tons or down 3.3 % if compared to October 2010. UWF paper factories operate 84 % of installed capacity. Capacity use at such a rate is considered unprofitable as paper factories wish to operate at least 90 % of installed capacity.

            In West Europe in October 2011, demand for UWF paper reaches 1.9 million tons, or down 5.1 % from September 2011. The highest demand occurs on CWF paper which declines 6.1 % if compared to September 2011. Economic sluggishness and overcapacity of UWF paper has put pressure on price of CWF paper.

            It is hard for CWF paper producers to expect paper price to increase, especially due to a very high oversupply. Even though paper factory in Europe (Sappi) has closed down its CWF paper factory in Biberist with a capacity of 435,000 tons/year, Lecta paper factory reduces production, Kymi paper factory temporary closes CWF paper factory with a capacity of 450,000 tons/year, Stora Enso paper factory changes from CWF paper production with a capacity of 140,000 tons/year to specialty paper production, and M-real paper factory will close down Paper Machine No. 2 in Aanekoski factory with a capacity of 200,000 tons/year, but market is still experiencing oversupply of CWF paper.