Asian pulp supply 'remains plentiful despite troubles'<\/p>\n
SINGAPORE (Dow Jones): Asian pulp supply will remain abundant
\ndespite Asia Pulp & Paper Co.'s (APP) financial troubles,
\nanalysts said.<\/p>\n
Some believe APP's mountain of debts may pull the brakes on
\nAPP's milling operations and lead to a drastic reduction in
\nIndonesia's pulp exports, helping the market to recover.<\/p>\n
\"As long as they're still producing (pulp), I don't see an
\nimmediate impact on (Asian) pulp supply,\" said Tan Ee Lin,
\nStandard & Poor Corp.'s pulp and paper analyst.<\/p>\n
Singapore-based APP is one of the world's biggest pulp and
\npaper producers. Its two pulp mills in Indonesia account for half
\nof Indonesia's 4.6 million metric tons pulp output last year.<\/p>\n
The abundance of cheap Indonesia pulp in the Asian market is
\nweighing on harwood pulp prices. Prices are now just under
\n$500\/ton level, cost-and-freight, delivered to Asian markets.
\nIn November 2000, prices were around $690-$720\/ton, C&F.
\nSome said prices are expected to slump to $450\/ton in March.<\/p>\n
APP is saddled with a $10 billion debt that has to be paid
\nwithin the next three years.<\/p>\n
Last month, some of APP's suppliers reported that they were
\nexperiencing delays in payments. Two of APP's creditors, Credit
\nLyonnais SA and the Union de Banques Arabes & Francaises, have
\nalready filed a complaint against APP in Singapore's high court.<\/p>\n
APP will continuously produce pulp as long as its pulp making
\nmachines are still running, pulp and paper analysts in Singapore
\nand Jakarta said.<\/p>\n
\"It's mostly financial not operational problem,\" said Irwan
\nJunus, analyst for Indosuez WI Carr Securities in Jakarta.<\/p>\n
Despite repeated requests from Dow Jones Newswires, APP
\nofficials refused to comment on its milling operations.<\/p>\n
Tjiwi Kimia is APP's biggest paper manufacturing company. Last
\nyear, out of the estimated 2.68 million tons of paper that APP
\nproduced, Tjiwi Kimia accounted for 1.01 million tons.<\/p>\n
Analysts added only an upswing in the region's current paper
\ndemand can substantially reduce the big pulp supply in Asia.<\/p>\n
\"The only thing that will decrease pulp supply is an increase
\nin paper demand,\" said one Singapore-based analyst.<\/p>\n
In its global pulp and paper report released November 2000,
\nthe Salomon Smith Barney Global Research said, \"the near term
\nmarket pulp fundamentals are showing signs of weakness, as
\nproducer inventory levels are on the rise, demand from Asia has
\npulled back, and producer downtime has been lower than normal.\"<\/p>\n
Tokyo-based pulp traders share the same view. They said that
\naside from the onslaught of cheap hardwood pulp imports from
\nIndonesia, the high pulp inventory in China is also pushing down
\nprices.<\/p>\n
China is Asia's biggest pulp importer, with yearly purchase
\namounting to around 3 million tons.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asian-pulp-supply-remains-plentiful-despite-troubles-1447893297",
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