Industry Reports

Deutsche Bank Reports Summaries

080519 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (5/19/08)

Deutsche Bank - Equity Research

* NEWSPRINT

May prices for 30-lb newsprint rose $20/mton to $680/mtons. Another $20/mton increase is expected for June.  Additionally, AbitibiBowater announced a $60/mton hike for 3Q, which could increase the price of newsprint to $760/mton.  Publishers are likely to be increasingly resistant to further hikes. Newsprint decline is getting worse, as consumption @ US dailies fell 15.2% y/y in March (-12.8% YTD).  DB's annual "Montreal Summit" on June 17-18th will include meetings w/ senior management at AbitibiBowater, Catalyst and Kruger.

* CONTAINERBOARD

May c'board prices remained flat - - - further proving that the $50/ton spring price hike initiative is dead. Current market dynamics raise the prospect that the hike will be implemented in mid/late summer, much as last year's hike was. 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.

* BLEACHED BOARD / SBS

IP, MeadWestvaco and Potlatch fell behind Rock-Tenn in announcing a $40/ton price hike for late May/early June on folding carton

grades.    On cupstock grades, prices increased $50-65/ton in May (or about 20% since June '06).   The increase was driven by stable domestic demand and strong export demand.