Industry Reports

Deutsche Bank Reports Summaries

080123 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (1/23/08)

Deutsche Bank - Equity Research

* NEWSPRINT

SP Newsprint has been sold to the owner of White Birch Paper (#2 producer by capacity) for an underwhelming $350M (we think the Newburg, OR mill was a "freebie").  With recent mill closures, customers scramble for paper and prices are surging.   An autumn hike "stuck" and ABH's 3 consecutive $20 monthly increase for Q1 are taking hold.  ABH's David Paterson recently argued that NA Newsprint prices will continue to rising to meet European levels - roughly $200/mton above NA.  While we're a bit more cautious than Dave, we think the rebound's strength could surprise most observers.

* MARKT PULP

NBSK pulp prices advanced $5/mton to $880/mton this month after Canfor implemented a $10/mton increase.  Additionally, fluff pulp prices increased roughly $30/mton to $895/mton, with Weyerhaeuser, GP, IP and AB all implemented price hikes this month.  Aracruz has just announced $20/mton for eucalyptus in Europe on 2/1/08 - others are likely to follow.  Market fundamentals have not changed much - - - supplies are tight, the US$ is weak, and wood, energy & freight costs are still high - - - the rally will likely continue into 2008.

* UNCOATED FREE SHEET

The market appears balanced, but not especially tight.  Domtar & IP have announced a series of $60/ton February increase on cut-size paper.  Increases were not announced on many rollstock grades - perhaps, an attempt to squeeze nonintegrated mills selling into roll market.  December UFS shipments and purchases of uncoated free sheet both dropped 5.0% y/y.