First Quarter 2010 Report

The swing in business trends following the Global emergence from recession became very noticeable at the start of 2010.

Strong demand from Asia, especially China, at the start of the year was accompanied by equally strong European domestic demand

The container Shipping Lines which were projected to post losses of around USD20Billion for 2009, continued their drive not only to increase basic freight rates, but also started imposing new surcharges examples of these being, increased BAF (Bunker Adjustment Factor), and CAF (Currency Adjustment Factor),  STF (Suez Canal Surcharge), ERC (Emergence Risk Surcharge), EBS (Emergence Bunker surcharge), Piracy Surcharge, THC, (Terminal Handling charge), and other surcharges that the Lines considered appropriate to impose. The total Freight cost payable was therefore the freight charge plus all the other surcharges added on, making Export pricing more challenging than ever. In the 1^st quarter, exporters had to absorb total freight increases of between USD400-500, with further increase USD150-200 already announced for April

The tough winter, the worst for 30 years, contributed to greatly reduced collections of Fibre, against an increasing global demand, resulting in a strong increase in Fibre prices in Q1.

During the 1^st quarter Paper mills had to cope with rising fibre prices which in turn reflected in increased Finished Paper prices.

Exports from Europe continued to be affected by the weakness of the Euro  which depreciated by more than 5 % against the US Dollar during the last 3 months, with Sterling depreciating by over  7% against the US Currency in the same period.

The trend in prices for OCC during the current quarter showed a strong upward trend, with January prices of USD195+ moving up to USD235+ pre Chinese New Year. Following this Holiday period, the Mills were reluctant to procure at pre New Year prices. We started experiencing price adjustments in March down to USD230+ which by the end of the month were in the order of USD215+.

Mixed Paper prices began the year at USD175+ and moved up to USD195+ by the beginning of the Chinese New Year celebrations. Once again, in March Mill buyers were seeking lower prices and we saw a dip in the price to USD185+.

Demand for other grades, News & Pams, Magazines Sorted Office Paper & Coated Book Stock also reflected a similar pattern over the last 3 months.

Indonesia, India Taiwan, Korea, Vietnam & Thailand continued their normal levels of imports and we look forward to their business maintaining these levels for the remainder of 2010.

With winter now behind us, we anticipate a rise in collection levels, but the challenge for prices to be sustained at the March-end levels will strongly depend on European domestic demand, currency volatility and more importantly how far the Shipping Lines feel they can push the freight rates to.