Industry Reports

Deutsche Bank Reports Summaries

080114 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (1/14/08)

Deutsche Bank - Equity Research

* NEWSPRINT

Newsprint inventories are falling, as customers scramble for paper. 

According to the trades, $20 of $25 autumn price hike was implemented in December, with publishers' finally conceding to the cash-strapped producers.  ABH's David Paterson recently argued that NA Newsprint prices will continue to rising to meet European levels -  roughly $200/mton above NA.  While we're a bit more cautious, we think the rebound's strength could surprise most observers.   Trade reports suggest that ABH's $60/mton hikes for Q1 is rolling in and observers suggest there could be more in Q2.  NewPage has reportedly followed a $100/mton hike in January with a demand for $40 more in February.

* CONTAINERBOARD

The domestic market remains balanced.  We have heard no follow-up news to a late Q4 white-top price hike attempt by IP and GP.  We think producers are watching the fundamentals as they weigh a move on pricing.  Historically, a failed price hike attempt can sometimes be worse than no attempt.  One other important issue, OCC prices are defying conventional wisdom and surging upward.   OCC costs could help to drive global containerboard prices.

* COATED GROUNDWOOD

Wow!!!  The LWC market remains extremely tight, with customers scrambling for volume.  According to one well-placed industry consultant, price on 40# LWC have increased $190/ton between June of 2007 and January of 2008. Our trade sources report that coated rolls remain especially tight.  Shipment volumes rose 6.6% y/y in November (+2.2% YTD).  Preliminary December vol's were up10.9%.  On the trade side, European mills are trimming export volumes to the US