Chile: Earthquake hits the Core of Pulp & Paper Industry

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Critical situation forces total stop of market pulp production

by Papermarket.cl - Chile

The Chilean Earthquake of March 3d 2010 affected severely the area hosting the whole capacity for pulp and paper making of the country from Northern to Southern Central Chile, with intensities varying from 8 to 8.8 Richter. The epicenter, between the VII and VIII regions of Chile, is the core of the virgin pulp making industry with all mills standing in a radius lower than 250 kilometers. With a moderate intensity, 5 to 6 Richter, it was also suffered by Arauco - Valdivia, Cartulinas Valdivia and CMPC - Pacífico, within IX to XIV Regions.

Arauco, the large market pulp producer, owns 4 factories in the critical areas and reported no human fatalities but important damage being evaluated. Arauco - Constitucion, very close to the epicenter, seems the most affected industrial complex. According to contingency plans, mill activity has stopped. No forecast for operational activity has been scheduled due to road closures, energy blackouts and communication failure for all the area.

CMPC, with Cartulinas Maule, Santa Fe, Laja and Inforsa close to the epicenter, reported no human fatalities or major structural damage to mill facilities, but difficulties to assess damage due to power blackouts. Mill activity has stopped due to energy failure and lack of water supply. Cartulinas Valdivia and the corrugated paper mill at Buin keep operating. Forecasts for full operational activity have not been issued, but it is expected it will happen as soon as possible.

Norske Skog Biobio mill, newspaper producer, and Papelera Concepción, making corrugated papers from recycled materials, are expected to have stopped activity, but situation is yet unclear due to communications failure.

Major and minor cities for the VII and VIII Regions suffer power blackouts and no water supply. Coastal cities have been affected by tsunami. The VIII Region hosts the four major ports used by the Chilean pulp and paper industry for exports, and all of them have ceased activity. Customs Department building at Talcahuano was partially covered by tsunami waves and damages are estimated as catastrophic.

Paper exports throught these ports do not mean big volumes (225,000 ton by CMPC in 2009), however 98.5% of cellulosic pulp exports by Arauco and CMPC are shipped from them. All ports are closed and major ships are in the area are in stand by. San Vicente port is moderately damaged, Lirquén port has not yet reported due to communication failure.

The Pan-American Highway, a major internal shipping route has experienced traffic closures, structural damage and bridge failure, limiting connectivity for the whole country. Secondary routes, with trenches half to two meter wide, are non operative.

Power blackouts, lack of water supply, road traffic limited, non operational ports and customs office and human fatalities do not allow to estimate a quick recovery. It is reasonable to estimate than no earlier than a week to ten days are necessary just to evaluate new machines. The impact on market cellulosic pulp stocks can reach 325,000 ton for a whole month of non activity.

Communications Department - Papermarket - Chile

Other Information Flashes

Chile: all forestry works, paralyzed.

"Our first worry now is picking up those workers who have been marooned at forestry work camps. These people are isolated, so forestry firms are working out their rescue to bring them home and help their families with any material damage suffered. We do not know exactly what their number is since it depends on work schedules for last Friday, but we are at peak of timber harvest season so we may be talking about thousands of forestry workers"

"Sawmills are totally paralyzed. We are especially worried about small and medium sized sawmills, without power they cannot test their machines to work out damage levels. We know they have been damaged, but not the extent of damage yet."

José Rafael Campino, President CORMA - Corporación Chilena de la Madera

(Seen at El Mercurio, via Painel Florestal)

IUFRO President: Letter to Chile

European Commission: Chile Earthquake Tsunami Impact Map

[Download PDF, 440KB]

Chilean Ministry of Agriculture announces State of Ports

Minagri, through the Agriculture & Animal Production Service (SAG), reports that a great part of export ports and offices have restarted operations after the earthquake affecting different areas of the country.

SAG works to reactivate 3 out of 8 ports out of service in Valparaíso and the sectorial office at Talcahuano Port.

(Seen at Minagri-Government of Chile)

Chile Earthquake: Asian Market Pulp Prices may reach 1000 U$ / tonne

"It is no surprise that the earthquake in Chile will tighten the global market pulp supply and push up market pulp prices worldwide. This is because the market pulp capacity in Chile account for 8% of the world total. RISI estimates at least 3.75 million metric tons of the country's 4.8 million tons of annual capacity is closed due to aftereffects of the earthquake."

"As of today, major Chilean pulp producers Arauco and CMPC have not given the production restart date for their pulp mills, and pulp shipments will also be held up due to the damages to the ports in Chile. RISI estimates BHK prices will jump more than $100/tonne in the second quarter from the first quarter prices level, while BSK prices will increase by at least $60 as a result of this "Force Majeure" case, ie: a shock of pulp tightness. There is even the possibility of some pulp prices rising to more than $1,000/tonne, higher than the last peak in 1995".

(By Sandy Lu - Shangai. Seen at RISI)

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