Hasan welcomes falling pulp prices

Hasan welcomes falling pulp prices

JAKARTA (JP): Falling pulp prices on the world market benefit
Indonesian pulp producers, chairman of the Indonesian Forestry
Society, Bob Hasan, said yesterday.

"The drop in pulp prices is advantageous for us, not only
because we can profit from lower prices but also because the
price fall could lead to the collapse of overseas pulp
producers," he said.

Pulp prices dropped to their lowest level early this month to
approximately US$500 a ton, down from a range between $900 and
$1,000 a few months ago because of increasing supplies from sub-
tropical countries such as Canada, the United States and European
countries.

Bob said the price reduction did not hurt Indonesian pulp
producers because their production costs were much lower than
those of companies in sub-tropical countries.

He said the current price of around $500 a ton was far lower
than the average costs for producing pulp in the United States,
Europe and Canada.

"The production costs in those countries are around $600 for a
ton of pulp. Based on current prices, those producers suffer a
loss of around $100 a ton," he said, adding that if no efforts
were made to reduce the world's pulp stockpile, many pulp
producers, especially those in industrialized companies, would
collapse.

The production costs of Indonesian pulp makers are lower
because Indonesian trees can grow suitably in around eight years
compared with more than 80 years for trees in temperate climates.

He suggested that Indonesian companies export pulp not paper,
reasoning that if they exported both they may be labeled "too
aggressive" by overseas producers.

"As a consequence, overseas producers would consider us not
merely as a rival but as an enemy," he said, adding that if
Indonesian companies wanted to sell paper products overseas, they
should sell through foreign agents. (hen)