A DIFFERENCE OF OPINION
Paper stock markets are on a seesaw. Several paper stock dealers feel markets are starting to improve, and should continue to do so through the first half of this year. They point toward steady to strong demand by a number of Asian mills as helping to drive markets. With continued strength from Asia, more domestic mills will come in with better prices to meet the export price.
While this theory has backers, another camp feels the improved markets are only a short-term boost, and the fundamentals that could drive the market are more suspect. Offshore orders may be increasing, but much of the late 1998 and early 1999 push was caused by Asian mill buyers looking to offset higher container freight rates that were being rumored to take effect from December through February.
Along with higher freight rates is the re-appearance of container shortages, which could make the export market fairly tight through the rest of the winter.
Another factor naysayers point to is the effect the Chinese New Year typically has on markets. During the Asian holiday, celebrated this month, movement falls off suddenly. This may put a chill on orders for most of February, and it could be met with indifferent orders from domestic mills.
Skeptics note that if the freight rate does take hold, it is likely many Asian buyers will pull back from their purchases, allowing domestic mills to maintain their lower prices.
While there are mixed opinions on price, vendors unanimously see movement of most paper stock grades as steady to strong. Typical January reduced generation has created better movement, especially for old corrugated.