Archive for the ‘Pulp and paper prices’ Category

Metso Investor Magazine has an interview with Pöyry vice president Tuomo Niemi. The article notes that according to the FAOSTAT database, in 1994 world production of pulp was 178 million tons. By 2004, the figure had increased to 189 million tons. That’s an increase of about one million tons a year. Metso estimates that about 2.5 million tons of new pulp capacity is “needed” each year.

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According to RISI, Aracruz may be about to announce plans to install another pulp line at its Veracel pulp mill in Bahia. Veracel is a 900,000 t/yr pulp mill, built and run as a joint venture between Aracruz and Stora Enso.

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Pulp and paper prices are cyclical. The theory is simple: High economic growth leads to high paper consumption and demand. This in turn leads to high sales, high prices and high profits for the paper industry. Companies invest the money in new capacity. By the time the new capacity comes on line (five years later), economic growth has slowed. The market is flooded with paper (or pulp) and prices collapse.

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