<b>Canadian Pulp Production Plummets</b>

The production of market pulp at Canadian mills dropped a steep 14 percent for March. According to the Pulp and Paper Products Council, total production stands at 695,000 metric tons for the month, compared to last March’s figure of 808,000 metric tons. Canadian mills operated at 84 percent of capacity for the month, a large fall from last March’s figure of 98 percent of capacity.

Production over the first three months of the year also shows a decline. According to the PPPC, production from Jan.-March stands at 2.147 million metric tons, an 11 percent drop from last year’s figures.

The sharp drop in pulp prices throughout the world has forced many Norscan producers to shut down machines in an attempt to bring supply and demand back into balance.

Despite these proactive moves by many pulp producers, the price of market pulp continues to plummet. Several reports have come in pointing out that despite slumping prices, a number of producers, outside North America are opting to run machines full out, regardless of price. This move is being performed, some speculate, to bring in hard currency for some cash-starved operations.

Despite the sharp cut in production, there continues to be more downtime being taken through the supply chain. With little indication of any turnaround in price or an improvement in demand it is likely that more downtime will continue to be taken through most of this year.

The shipment of finished pulp also posted a steep drop for both the month and through the first quarter of the year. For March, market pulp shipments dropped by 12 percent to 737,000 metric tons.

The shipment of market pulp dropped an even sharper 16 percent through the first three months of the year. For this year, the shipment total stands at 2.073 million metric tons, compared to last year’s three-month total of 2.457 million metric tons.

Declines in pulp shipments were seen in every section during March. Shipments to the United States, the largest end market for market pulp, dropped by 14 percent; shipments to Western Europe, down 8 percent; shipments to Japan, down 6 percent; shipments to Canada, down a steep 34 percent; and shipments to other regions off by 6 percent.

One positive has been the ability of pulp producers to reduce their inventory levels, although the figures are far higher than last year. At the end of March inventory levels reached 873,000 metric tons, down slightly from the previous month’s figure of 915,000 metric tons. Although down slightly, the inventory level is up more than 350,000 metric tons from last March’s inventory level of 510,000 metric tons.