The Utipulp inventory, which measures the pulp inventory levels with European paper manufacturers, increased by 13,000 tonnes over that in February 1999, to 1.386 million tonnes in March 1999. The Utipulp inventory was at 1.254 million tonnes in March 1998. Paper mills have started building up pulp inventories, particularly hardwood pulp, in anticipation of an increase in pulp prices. Hardwood pulp inventories withpaper mills increased by 22,717 tonnes, as compared with a total increase of 13,000 tonnes.

In the US and Europe, pulp mills are planning to increase the prices of the northern bleached softwood kraft (NBSK) grade by $20 per tonne, to $500 per tonne in May 1999. Eucalyptus pulp prices increased by Euro 20 per tonne, to Euro 440 per tonne in May 1999. The price increase is likely to be absorbed due to improved demand from south east Asia, particularly from China, Korea and Indonesia. According to reports, in 1999, nearly 1.4 million tonnes of new paper capacity is expected to be added in China. The expected commissioning of new paper capacities in Indonesia is likely to result in the lower availability of pulp for exports. Hardwood pulp prices are likely to increase further due to short supply and downtimes undertaken by hardwood pulp mills.

(This report is a part of `Pricewatch', a monthly commodity report prepared by INFAC, a leading Indian industry information research firm. For further informationon the subject visit: www.infac.com)