Market development
In 2006, project activity for greenfield plants, as well as modernization and rebuilds of existing plants, was at a satisfactory level. Projects for new pulp mills and capacity additions continued to be focused in the southern hemisphere (South America, South Africa, Australia, and Southeast Asia) and China. Investments for the modernization and refurbishments of existing mills developed favorably in Europe, and to some extent in North America.
The development of pulp prices in 2006 was characterized by continued strong demand from international paper producers and reduced pulp supply from North American pulp producers. As a consequence, the price for Northern Bleached Softwood Kraft (NBSK) pulp increased from approximately 600 US dollars per ton at the beginning of 2006 to approximately 750 US dollars per ton at the end of 2006.
The price for hardwood pulps (e.g. birch and eucalyptus) also increased during 2006, although much more moderately than for NBSK. This was due to the availability of sufficient production capacities and market expectations that further capacities will come on-stream in South America in the near future.
Demand for paper continues to grow in Asia (especially in China and India) based on the very positive economic development in these regions. This triggers increasing demand for virgin fibers and recycled fibers as most of the paper production is based on recycled fibers. In these countries, demand for higher paper quality is also on the rise, thus boosting equipment modernizations and investments in paper finishing equipment.