Industry Reports

Deutsche Bank Reports Summaries

080401 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (4/1/08)

Deutsche Bank - Equity Research

* MARKET PULP

Aracruz, CENIBRA and VCP announced an April $40/mton BEK price increase in NA, despite flat global inventories and strong demand for NBSK.  NBSK prices remained flat in March at $880/mton.  Canfor Pulp and Domtar have announced plans to increase NBSK prices in Europe to $920/mton, a $40/mton increase.  At $900/mton, fluff prices are now up $170/mton over the last 18 months.  Market fundamentals remain largely unchanged: supplies are tight, the US$ is weak, and wood, energy & freight costs are still high. 

* COATED GROUNDWOOD

Snuggest market in the industry? LWC prices remained flat in March, but producers have announced a $60/ton price increase for early April.  Due to tight markets, Newpage announced it will delay closing its Niagara, WI, mill, with 215K tons of capacity, until the fall.  We think New Page is also investigating the sale of the mill.  DB is receiving reports of 10-12 wk backlogs as customers stock up in anticipation of price hikes.  Shipment volumes rose 7.6% y/y in February and are up 10.6% YTD.  It looks like a good environment for smaller LWC producers like Domtar to consider exiting the market.

* BLEACHED BOARD / SBS

The price of folding carton grades rose $20/ton in March, achieving half of the $40/ton price hike initiative for February. 

MeadWestvaco, International Paper, Georgia Pacific and Rank Group have announced $50-75/ton increase for cupstock grades for April/May.  The weak US$ is helping to boost exports.  Tightness in the CRB market is also helping.  We continue to expect more industry consolidation in the bleached paperboard sector.