SCG sees flat sales until US revives

       SCG Paper, The country's largest paper manufacturer,expects no sales growth from last year as the US economy has not recovered enough to drive global demand.
       SCG Paper has sourced scrap paper from the United States where declining purchasing power has lowered the price by around 30% this year, said president Chaovalit Ekabut.
       "The US has yet to see an economic recovery. In large cities people are still buying, but not in the towns where there aren't a lot of people," he said.
       However, the price of scrap paper has seen a small increase since the end of the third quarter. Paper scrap is currently traded at $160 to $170 per tonne,compared with the record high of $250 in June last year.
       Paper scrap, which is used in paper production, may be more expensive if oil prices rise further. The price of shortfibre pulp has also risen from a range of $520-530 to $560, pushing the prices of printing and writing paper up marginally.
       Meanwhile, China is expected to increase its paper production by another 2 million tonnes next year and that will drive the demand and prices of raw material to rise further.
       "However, we are not planning to stock more raw material because we are studying the possibility of using alternative materials that are easy to buy locally, such as weeds," said Mr Chaovalit.
       In Thailand, demand for packaging paper and printing paper has rebounded since the third quarter and the market has already returned to the same levels as last year. The price of packaging paper is on the rise and should be stable at around $150-160 a tonne at the end of this quarter, he added.
       In the third quarter of this year, SCG Paper's sales totalled 11.23 billion baht,up 6% from the second quarter but still down 9% compared to the same period of 2008 due to lower product prices. Net profit was 701 million baht, up 10% on a quarterly basis and 13% year-on-year.
       Mr Chaovalit said packaging paper sales fell 7% in the first nine months while printing paper declined by 11%.However, third-quarter sales of packaging paper grew by 3% compared to last year.
       Positive annualised growth is foreseen in the fourth quarter, driving the paper market in Thailand to the same level as last year."Growth of zero would still be fine," Mr Chaovalit said.
       SCG Paper's 5-billion-baht paper plant in Vietnam, which has been operating since the second quarter, will raise its production in November and December.He projects it will contribute around 2.5 billion baht to the sales next year.
       Shares of Siam Cement (SCC) closed on Friday on the Stock Exchange of Thailand at 204 baht, unchanged, in trade worth 423 million baht.