Riau pulp's production falls 13 percent, says ARH
Riau pulp's production falls 13 percent, says ARH
SINGAPORE (Dow Jones): PT Riau Andalan Pulp & Paper's bleached hardwood kraft pulp production in Indonesia fell 1.3 percent to 158,233 metric tons in the second quarter of this year from the first quarter, according to a press release by Asia Pacific Resources International Holdings (ARH) Wednesday.
The first quarter's production was 160,357 tons.
Singapore-based Asia Pacific Resources International, also known as April, owns 98.5 percent of PT Riau Andalan Pulp & Paper, or Riaupulp.
In the second quarter, around 38 percent of Riaupulp's production was sold to Riau Andalan Kertas, or Riaupaper, and the Changshu mill in Suzhou, China. April owns 99.8 percent of Riaupaper through its subsidiary April Fine Paper. It also owns 49 percent of the Changshu mill.
Riaupulp's major markets are Australia/Asia, Europe and Indonesia.
Riaupulp took eight days of scheduled annual maintenance downtime in the second quarter, but is on target to achieve BHKP production of about 760,000 tons in 1999, the release said.
To reach its longer-term goal capacity of two million tons a year, Riaupulp is expanding its existing pulp line and in the process of building a second line.
In the expansion of the current pulp line, it is targeting an increase in production capacity to 850,000 tons/year.
April plans to build the second pulp line in two phases. The first phase, which is half completed, is targeted to produce 450,000 tons/year, raising total production to 1.3 million tons/year when completed.
Construction will take 18 months after the successful conclusion of financing, currently being negotiated, according to an April spokesman.
Construction of the line stopped last year as financing ran out with the onset of the Asian economic crisis, he said.
This line is expected to cost around US$520 million, or US$1,155 per annual installed ton. So far, about US$174 million has been spent, financed largely by equity contributions from April.
The management expects the remaining US$350 million to be financed by existing lenders, cashflow from operations post-debt restructuring, as well as customers, suppliers or additional equity contributions, the release said.
According to the release, April has been selling BHKP at up to US$520 a ton, cost and freight basis, North American ports.
April, which has an "extremely low" inventory, hasn't observed any weakening of the pulp market despite the typical seasonal slowdown due to the summer holiday, the release said.
The average price April received for third-party sales was $437/ton, on a cost, insurance and freight basis, in the second quarter, up $67/ton from the first quarter.
Riaupaper's uncoated wood-free paper production rose 11 percent to 60,027 tons in the second quarter from the first quarter's 53,935 tons.
About 45 percent of second-quarter production was cut-size paper and 20 percent offset/folio, with the rest being reel format.
Riaupaper plans a maintenance downtime of three to four days in the third quarter, but is on target to produce about 250,000 tons this year, the release said.
It posted sales of 59,433 tons of UWF paper in the second quarter, up 14 percent from the 52,052 tons in the first quarter.
Approximately 44 percent of the second quarter's sales were made through April's partners.