Paper and Pulp Prices on the Rise

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Prices are rising in almost every pulp, paper, and paperboard grade, according to Mark Wilde, senior analyst with Deutsche Bank, who adds that "it's mostly a supply-side story." The sharp demand decline in late 2008 and early 2009, he explains, caused the industry to announce substantial capacity closures. In recent months, supply has been further restricted, because many mills have been subject to downtime or slowbacks due to fiber issues resulting from unusually wet weather. Some grades are also being impacted by the Chilean earthquake.

In almost every paper grade, tight markets and elevated fiber costs are pushing prices higher, Wilde notes. Perhaps the most notable hike initiative is in containerboard, where producers are out with a $60/ton increase for April 1. This follows a $50/ton increase on January 1. "While a second hike in such a short order appears surprising, we think that producers have a good chance to push it through,"Wilde says.