Pulp reporting change could spread to paper

In a move that could have implications across the pulp, paper, and board industry, all key global trade associations implemented changes to their monthly worldwide pulp producer inventory reports in September, including shifting statistical data from actual tonnage to days of supply. The first month to be affected was the August report, which was to be released around Sept. 20.

The change means that inventories for global pulp producers in 19 countries, which has been reported monthly as an actual total number, will no longer be released as such publicly. Instead, the trade associations will report a days of supply total for global pulp stock for the month.

Some contacts with major producers said the change was necessary because the global inventory total and change in a given month have become key negotiating pieces in market pulp pricing. The change in reporting was driven by several major U.S. pulp producers represented by the American Forest & Paper Assn. (AF&PA), which then took a lead role in negotiating the changes with several other international associations.

No other sector of the North American paper industry only reports inventory in days of supply. AF&PA and the Pulp and Paper Products Council (PPPC) in Canada every month report producer inventories for printing/writing paper, Containerboard, newsprint, boxboard, and kraft paper. Many of these assodation reports are available to nonmembers and sold to the public.

Pulp producers hope the change in statistical reporting will push the market's focus to downstream factors such as pulp consumer demand, as well as paper inventories and demand. Perhaps more significantly, several producers have said they believe that moving to a days-of-supply format will reduce pricing volatility by lowering the emphasis on monthly inventory changes.

"It has that potential because today you'll find a lot of people arguing on numbers and defining a market trend off very small changes in numbers," said a producer contact. "It will really push the emphasis on the consumer inventories side."

Producers voted to shift inventory reporting to days-of-supply instead of actual tonnage during a conference call on Aug. 25-the day before a report on global pulp stocks showed inventories soared 344,000 tonnes in July. Since then and as of Sept. 1, Weyerhaeuser Co., announced a $30/tonne decrease on its northern bleached softwood kraft.

Industry contacts said it's possible that similar changes could happen in other key grades such as containerboard, newsprint, or printing and writing papers. However, contacts also said that the reporting of the total inventory number affects pulp differently than other paper and board grades. Some contacts didn't believe that containerboard, newsprint, and printing and writing pricing was as directly affected by their monthly inventory totals as pulp is.

All four major trade associations agreed to change their statistical reports, including the AF&PA, PPPC, the Confederation of European Paper Industries, and the Finnish Forestry Industries Federation. Contacts at producers that also manufacture downstream paper and board said no discussions have taken place regarding similar changes to reports on containerboard, newsprint, or paper but said that was a possibility in about six months to a year.