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MARKET DEVELOPMENT

During 2007, international pulp markets developed very positively. Due to a continued strong demand from international paper producers and wood supply disruptions caused by bad weather conditions and strikes, pulp supply has been tight. As a result, the price for NBSK (Northern Bleached Softwood Kraft Pulp) has continuously increased during the reporting year, from USD 750 at the beginning of the year to USD 860 per ton in December 2007.

In step with NBSK, the price for short-fiber pulp (birch and eucalyptus) also increased during 2007. Strong demand, and new capacity in South America coming onstream somewhat later than expected, led to a price increase for eucalyptus pulp from USD 670 in January to over USD 750 per ton in December 2007. Since pulp is usually traded in U.S. dollars, and the dollar has depreciated against most currencies, the effect of the price increase was somewhat dampened for Euro-based customers.  

Project activity for pulping equipment during the reporting period remained at a satisfactory level, with the focus for greenfield pulp mills again concentrating on the Southern hemisphere (South America, Australia, and Asia) and China.  Investments for the modernization and refurbishment of existing pulp mills remained focused on Europe, and, to some extent, North America.