Shares of Indonesian pulp and paper producer PT Indah Kiat Pulp & Paper Corp. (INKP) rose in Jakarta trading as last month’s earthquake in Chile and a Finnish port strike that started last week may propel pulp prices to a record.
“The rising stock may be due to the Chile earthquake that has caused production to halt for several weeks, and maybe months,” said Yohan Setio, an analyst at Jakarta-based PT Mandiri Sekuritas. This means “global pulp and paper supply will be tight and therefore potentially push up pulp and paper price,” he said.
Indah Kiat advanced 1.2 percent to 2,200 rupiah at the closing of the Jakarta bourse today.
Last month’s 8.8 magnitude earthquake in Chile, the country’s strongest in 50 years, killed hundreds, destroyed thousands of homes and hammered pulp and timber producers in the country’s central southern region, close to the epicenter. In Finland, Stora Enso Oyj (STEAV) and UPM-Kymmene Oyj (UPM1V), Europe’s two largest papermakers, have closed mills and cut production as a strike by port workers that started March 4 cut off 90 percent of the Nordic nation’s exports.
Chile and Finland together account for 12 percent of world pulp sales. Pulp is the main raw material for paper.
The price of European benchmark pulp rose to $875.62 a ton this week, the biggest seven-day increase in almost six years, according to Helsinki-based FOEX Indexes Ltd. Pulp in Europe could top $1,000 a ton, higher than 1995’s peak, within a few months, said Kurt Schaefer, who analyses the fiber industry at Bedford, Massachusetts-based paper researcher RISI.
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