Industry Reports

Deutsche Bank Reports Summaries

080128 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (1/28/07)

Deutsche Bank - Equity Research

* MARKET PULP

Another round of pricing initiatives has just been announced by leading eucalyptus producers.  Additionally, fluff pulp prices increased roughly $30/mton to $895/mton, with Weyerhaeuser, Georgia- Pacific, International Paper and AbitibiBowater all implementing price hikes this month.  Market fundamentals have not changed much - - - supplies are tight, the US$ is weak, and wood, energy & freight costs are still high - - - the rally will likely continue into 2008.  We'll be in Latin America with Aracruz, Arauco, CMPC, Suzano, VCP, Veracel, and others, in late February on our annual investor tour.

* COATED GROUNDWOOD

Wow!  The LWC market remains extremely tight, with customers scrambling for volume.  Additionally, NewPage announced plans to close 317K tons of capacity.   Prices rose $30-60/ton in January, as an unusually early Q1 price hike appears to have "stuck". According to one well-placed industry consultant, price on 40# LWC have risen $190/ton between June of 2007 and January of 2008. Our trade sources report that coated rolls remain especially tight.  Shipment volumes rose 11.5% y/y in December (+2.9% YTD). We think this segment will see more consolidation in '08 as some smaller producers choose to exit the market. 

* BLEACHED BOARD / SBS

Producers are out with a $40/ton price hike initiative on cupstock grades for January.  In addition, International Paper, Georgia- Pacific, Meadwestvaco and Rock-Tenn announced a February increase for SBS folding carton grades & other specialty grades.  Demand is strong.  SBS folding output was up almost 13% in 2007.  The weak US$ appears to be helping.  Tightness in the CRB market may also be helping SBS. We continue to expect more industry consolidation in this sector over the next 6-9 months.