Market Pulp Collapse Not Likely
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With market pulp prices starting to slide after a big rally since the April 2009 bottom, there is some concern about a replay of the late 2008/early 2009 collapse, Wilde says, adding, however, that "we view this as unlikely." In the last downturn, he continues, the U.S. dollar played a significant role by rallying against the Euro from $1.56 to $1.25 and against the Brazilian Real from R1.57 to R2.43.
In recent months, the U.S. dollar has weakened against the Euro from $1.20 in early June to a recent $1.37 and against the Real from R1.89 in early June to a recent R1.71, Wilde reports. Other key factors in the last downturn are absent, he points out, including very high inventories, a collapse in demand, and black liquor credits in the U.S.
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