Industry Reports

Deutsche Bank Reports Summaries

080129 Deutsche Bank Report - Containerboard Hike in 08?

Deutsche Bank - Equity Research

* Will containerboard prices be moving up later in Q1?  A number of well-placed industry sources suggest that a price hike initiative is imminent.  We think Smurfit-Stone will announce a $40/ton initiative for March 1.

* While the economic outlook is uncertain, containerboard industry fundamentals would appear to support a price move.  Inventories remain very lean, industry operating rates averaged 97.2% in 07Q4 and raw material costs are rising on a global basis.  In addition, Smurfit, Georgia-Pacific and others containerboard producers have already announced a Q1 price hike on unbleached kraft paper, a grade which is highly correlated with containerboard.

* Among the companies on our coverage list, the players with the greatest leverage to containerboard are Packaging Corporation of America, Smurfit-Stone and Temple-Inland.  All are currently Buy rated names.