SAN FRANCISCO, May 26, 2009 (RISI) - International market pulp producer stocks dropped eight days-of-supply in April, continuing an inventory reversal that began in February to close the month at 35 days-of-supply and bring levels back to a normal range, according to the Pulp and Paper Product Council (PPPC).

The results provided a shot in the arm for producers seeking June price increases in North America and China, a country whose appetite for pulp showed no signs of ebbing.

"Producers are really speaking about how their inventories are tighter. I saw the PPPC numbers and given they've gone down they are seeing the market tightening up," said one US market participant after this morning's report.

Global chemical market pulp stocks in April dipped for the third consecutive month, leaving stocks down a combined 15 days-of-supply since a high of 50 days-of-supply was recorded in January. Since then, the industry has reigned in the historically large supply bulge.

Industry contacts had expected a hefty drop in inventories, but continued strong demand from China and downtime at market pulp mills around the world helped bring stocks down further than anticipated.

International market pulp shipments totaled 3.541 million tonnes in April, a small 1% rise from year-ago results and up 2.2% from March deliveries of 3.464 million tonnes, the PPPC reported.

Global shipments to China of 970,000 tonnes broke the prior record of 931,000 tonnes recorded in March, a month that eclipsed the 905,000 tonnes in December that was a record at the time.

Prices will likely rise a third consecutive month in China during June, where several producers have mostly $20/tonne price increases planned.

Producer contacts believe North American prices will also rise next month despite relatively sluggish demand in April, when global shipments of 552,000 tonnes dropped 26% from year-ago results of 746,000 tonnes and posted a 2.3% decline from March deliveries.

Contacts who believe domestic price hikes will get implemented next month cited US spot prices that are moving up, a stronger Canadian dollar, and a reduction in the number of fire sales of market pulp that occurred during the winter.