Industry Reports

Deutsche Bank Reports Summaries

080414 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (4/14/08)

Deutsche Bank - Equity Research

* LUMBER

The Random Lengths composite price increased $8 this week to $247/mbf.  Increased seasonal demand, and a production cut announcement from Canfor, drove the uptick - - - the largest increase in '08 thus far.  We think that even more curtailments will be required to balance the market. 

* CONTAINERBOARD

Meadwestvaco announced the sale of its Charleston, SC mill to Kapstone.  The mill runs about 400K tpy of linerboard.  At this point, a $50 spring hike appears unlikely and reports of spot discounting are becoming more widespread.  If demand doesn't drop sharply, we suspect producers will be back in late summer for another attempt (a replay of 2007).   Downstream box demand is slow, but doesn't appear to be falling sharply.  Markets like autos & housing are weak, but other niches are steady.  IP and SSCC continue to take a disciplined stance and are trying to hang tough on the spring increase.   On the cost side, export OCC prices have fallen $20-$30 /ton due to a reduction in Chinese demand.

* UNCOATED FREE SHEET

A substantial portion of the $60/ton price hike initiatives on uncoated free sheet grades was implemented in March.  According to the trades, cut-size prices rose $50/ton and offset roll prices rose $30/ton.  Preliminary #'s suggest shipments declined 7.8% y/y in March.  Because these preliminary numbers are subject to large revisions, so we're reserving judgment until the revised numbers are released.  On supply side, more changes could be coming among 2nd & 3rd tier producers.  Domtar sold a number of premium-end text & cover brands to privately-held Smart Paper.  Wausau's UFS operations have been EBITDA breakeven (or weaker) for the past 3 yrs and need a solution.