Sodra Cell International Friday was the first producer out of the gate with a June 1 price increase, and market analysts said they expect to see more. Sodra announced an increase of $20 a metric ton for Northern Bleached Softwood Kraft pulp in Europe, which will take the list price to $980 a ton.

Other companies are expected to announce price increases, although they aren't likely to do so this week, said Brian McClay, a principal at TerraChoice Market Services. This week is "Pulp Week," a gathering of market executives, analysts and economists, sponsored by the Market Pulp Association. The conference is being held in Chicago.

McClay said company executives don't want to announce price changes during pulp week, when many are attending the same event, to avoid charges of collusion. June price increases are more likely to be announced next week when decision-makers are back in their offices, he said.

Producers continue to push through their May 1 price increases with each new contract written, but reports continue to swirl about price cracks in China.

Mark Wilde, a market analyst for Deutsche Bank, said in an emailed comment that Chinese resale prices are falling. The euro also is weakening against the U.S. dollar, making pulp for European buyers even more expensive.

McClay said Chinese buyers are being more cautious as sellers try to reduce their inventories.

Traders have said that many Chinese buyers snapped up all available pulp supplies after the Feb. 25 earthquake in Chile to make sure they had enough. But now that Chilean mills are restarting, these supply fears are subsiding a bit among some of the Chinese traders.

That's not to say that world supplies still aren't tight. McClay said some European paper producers have shut down because of a lack of adequate pulp supplies, and Wilde said North American supplies remain tight, driven by strong demand, the fact that supply still hasn't caught up with the cuts from the earthquake, and downtime by producers for spring maintenance.

World pulp markets have had a good run. Statistics from Pulpandpaper.net show prices for Northern Bleached Softwood Kraft, or NBSK, pulp in North America rising in 10 of the last 11 months, up 48% to an average of $940 a ton on May 1 from $635 on June 1, 2009.

Pulpandpaper.net shows Bleached Eucalyptus Kraft pulp rising 54% to $840 a ton on May 1 from a low of $545 on June 1 last year.

NBSK pulp is in the process of rising $40 a ton, taking list prices to $1,000, its highest level ever, while Northern Bleached Hardwood Kraft pulp has $50 a ton more on its price tag, going to $920 a ton. Bleached Eucalyptus Kraft pulp also is up $50 at $920.

Many market analysts say they believe a June 1 price increase is coming, but after that, the market may take a breather to assess paper demand and world stocks.

Futures traders expect prices to remain strong into the second half of the year. The Chicago Mercantile Exchange's softwood pulp contract shows its first month-to-month price decline in August and trends lower in subsequent months.

Finland's index provider FOEX this week reported its U.S. list price index for Northern Bleached Softwood Kraft pulp was $975.58 a metric ton, up $23.27 from a week earlier and $145.58 higher than on Jan. 1.

FOEX also reported its index for European NBSK list pulp prices was up $15.43 from a week earlier at $944.64 a ton. This takes the index up $146.01 from Jan. 1.

FOEX said its European list price index for Bleached Hardwood Kraft Pulp was up $26.09 at $865.81 a ton. This is $165.81 higher than it was on Jan. 1.

Pulpandpaper.net reported NBSK as of May 1 in North America at $930 to $950 a ton, up $30 from a month earlier. In Europe, Pulpandpaper.net's price as of April 1 was $910 to $930, up $40 from a month earlier.

Pulpandpaper.net reported Bleached Eucalyptus Pulp in the U.S. as of May 1 at $830 to $850, up $30 from a month earlier. In Europe, Bleached Eucalyptus pulp was $595 to $620 as of April 1, up $25 to $35 from a month earlier.

-By Lester Aldrich, Dow Jones Newswires; 913-322-5179; lester.aldrich@dowjones.com

(END) Dow Jones Newswires