Demand for eucalyptus pulp declined in 1Q10 versus 4Q09 (-2.4%), reaching 3.5 million tons, but was 4.4% higher than in 1Q09. The main destinations for eucalyptus pulp in 1Q10 were Europe (45.0%), China (18.2%), Latin America (11.0%), North America (12.2%) and others (13.6%). In 1Q10, global market pulp production reached approximately 10.0 million tons, recording a 3.5% drop in relation to 4Q09 and a 9.5% increase against 1Q09, as a result of the restarts of production units that were shut down during the financial crisis.
An important fact to be taken into consideration in the quarter was the occurrence of the strong earthquake in Chile, which affected the country’s pulp production capacity, the infrastructure needed to transport raw materials and finished products and the availability of manpower, which was also affected by the tremor. Chile accounts for approximately 8% of global pulp production and, according to preliminary estimates from specialized firms, the earthquake should cause a reduction of 600 thousand to 800 thousand tons in this country’s bleached pulp production (hardwood and softwood). This fact contributed to the reduction in global pulp inventories.
In addition to the severe impact of the Chilean earthquake, other restrictions in global pulp supply occurred in 1Q10: production decline in Brazil due to operating problems faced by the main producers, climate problems in the south of the United States, and strikes in Finland, all of which contributed to a decrease in global production. After 10 consecutive months when demand for pulp exceeded production, interrupted in December 2009 and January 2010 due to seasonal factors, inventories once again started declining in February and March 2010, reaching 26 days of production in March 2010, a reduction of 17 days from 1Q09 and 7 days below the historical average of 33 days.
