<B>Pulp Substitute Prices Slipping</B>

A number of pulp substitute prices have been declining over the past month, even while published prices for market pulp are increasing. This anomaly has many in the industry perplexed. Any increase in pulp prices should translate into higher pulp substitutes. However, several sources report some pulp substitutes are seeing prices erode over the past several weeks.

A number of domestic mills are looking to cut their intake of some of the high-end grades. Canadian buyers have been paring back orders, while offshore mills have been less willing to place orders.

One theory being offered for the dip in pulp substitutes is the sense that while pulp producers are hiking their prices, there is an ample amount of discounting taking place. One large handler of the grade notes that inventories of pulp in Asia are very high, and good customers are seeing price rollbacks.

While there are some questions about the relative health of the pulp market, there does seem to be a move by a number of paper producers to hike their finished product prices. Over the past several weeks three of the largest producers of P&W paper have announced plans to raise their prices.

If this is the case, there will unlikely be any improved markets for deinking grades which are somewhat influenced by the swing in pulp prices.