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)