Industry Reports

Deutsche Bank Reports Summaries

080505 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (5/5/08)

Deutsche Bank - Equity Research

* CONTAINERBOARD

The explosion at IP's Vicksburg, MS linerboard mill should tighten the market. The mill, which has about 2% of US linerboard capacity, should be down for at least 2 months. With operating rates already in the mid-high 90's, the outage is likely to have a significant impact. It is probably too late to salvage the $50/ton price hike initiative this spring, but it raises the prospects that the hike will be implemented in mid/late summer, much as last year's hike was.

* BLEACHED PAPERBOARD

Rock-Tenn is out with another price hike initiative of $40/ton for June 2 on folding carton grades. The February initiative appears to be mostly implemented, as trade papers recognized increases of $20/ton in March and $10/ton in April. On cupstock grades, MeadWestvaco, International Paper, Georgia Pacific and Rank Group have announced $50-75/ton increases for April/May.

* STRUCTURAL PANELS

The structural panel composite increased $9/msf this week to $305/msf. The benchmark grade of OSB (7/16" in the North Central

region) rose $11/msf to $162/msf. Ainsworth, Norbord, Canfor, GP, and Weyerhaeuser have recently announced idling and/or permanent closures in OSB & plywood. As with lumber, we think that the prospect of a prolonged downturn will force further (and deeper) restructuring as we move through 2008.