On first view the figures seem to show an improvement in the pulp market as global stock levels in July, seasonally adjusted figures, came to 28 days, based on the latest data released by PPPC compared with 30 days the preceding month; but using standard calculation, stocks were at 29 days and unchanged on a month.
The figures actually hide a complete split around the world, with growth in shipments in excess of 60% to China while those to North America and Western Europe dropped by around 17%. Undoubtedly this divergence between China, which continues with the frenetic buying, and the Western World, which is on a strict diet, is tending to lessen as just a few months ago the buying by China grew by 70% while that of the Western economies declined by 23%. The split in the pulp world is still there but it is starting to diminish. The situation in Japan however has hardly altered and shipments on a year were down 23%, slight progress from the -28% of March.
Total world shipments in July 2009 came to 3.549 million tonnes, down 12,000 tonnes against the preceding month but up 133,000 tonnes on July 2008.
Total shipments were at 23.479 million tonnes, a 3.4% drop on a year and this even though the activity rate was on 90% in 2009 against 91% in 2008.
Softwood pulp shipments were the hardest hit with a 6.8% decline in total shipments over a year at 11.5 million tonnes, while total shipments of hardwood pulps remained unchanged on a year at 11.1 million tonnes.
The gap between the two grades in terms of the number of days of stocks is now much smaller. Back in July 2008 it was 11 days; in July 2009 it was down to just six days, with reserves of softwood pulp at just 25 days. This is a very low level and provides support for possible price rises.
These figures once again show that pulp sellers are wholly dependent on buyers in China and if there is a slowdown in this buying before any recovery in the western economies, there could well be a complete collapse in volumes shipped and thus in the prices.
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