Industry Reports

Deutsche Bank Reports Summaries

070402 Deutsche Bank Report - Dr. Paper's Pulse on Pricing

Deutsche Bank - Equity Research

COATED FREE SHEET

Biggest potential upside in H2?  Most producers have announced $50- $60/ton hikes on lower grade coated free sheet for March.  Rising pulp costs and capacity reductions are both helping to firm the market.  However, the biggest domestic issue is duties on Asian imports.  Preliminary countervailing duties on Chinese, Indonesian and Korean imports are 18%, 21% and 2%, respectively.  The next step is a Commerce Department ruling on antidumping duties, due out on May 29th.  Domestic shipments rose 10% in February ahead of possible duties on Asian imports.

MARKET PULP

Softwood markets remain tight.  Softwood inventory days of supply dropped from 27 in January to 25 in February.  European producers announced $20/mton hikes in Europe for April, joining their NA counterparts, we think they have a good chance of going through.  We do expect hardwood markets to feel more impact from new Latin mills as we move thru the year.  That said, we also think investors need to reevaluate "peak pricing" in light of changes in cost and FX moves.

CONTAINERBOARD

We are increasingly bearish about the prospects for the current price initiative.  Export pricing to both Europe and Asia rose in March, but net delivered prices are lower than trade paper "official" pricing.  Domestic volume weakness, exacerbated by the CA agriculture freeze, hasn't helped the pricing initiative. OCC costs have begun to fall back.  Lower OCC prices will make it difficult for producers to raise containerboard prices and could mean that they simply swallow the cost spike.