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In regard to market pulp, Mark Wilde, senior analyst with Deutsche Bank, says "the game has changed." The epicenter of the Chilean earthquake was near one of the world's largest clusters of large, low-cost pulp mills. With about 4.6 million metric tons or 8% of global capacity affected by the earthquake, the near-term global supply/demand balance has shifted dramatically. Most pulp producers already had March price hikes in place (North American softwood by $30/metric ton, taking domestic NBSK to $910/metric ton and $890/metric ton in Europe, and BEK by $30/ton worldwide). These price hikes are driven by tight pulpwood supplies, strong Chinese demand, and an increase in U.S. demand for spot tonnage, Wilde notes. "With most Chilean mills down after the earthquake (and not expected to be up anytime soon) and North American maintenance outages approaching, the current pricing rally shows no sign of flagging," he says, adding that some niche markets such as unbleached softwood kraft (the world's biggest mill was on the Pacific coast near the quake's epicenter) are extremely tight.
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