Industry Reports

Deutsche Bank Reports Summaries

080407 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (4/7/08)

Deutsche Bank - Equity Research

* CONTAINERBOARD

Spot tonnage is reportedly more available. Medium appears tighter than linerboard. On the demand side, box cut-up is sluggish. But, there is no evidence of a sharp drop in volumes. Markets like autos & housing are weak, but other niches are steady. IP and SSCC continue to take a disciplined stance and are reportedly hanging tough on a $50/ton spring price increase. At this point, we think a spring move looks unlikely and suspect producers will be back in late summer for another attempt (a replay of 2007). In the near- term, costs may have topped. Export OCC prices are down $20-$30 /ton due to a huge demand reduction by China's largest buyer of US recovered paper.

* MARKET PULP

Growing # of reports suggest that pulp mkt momentum is easing in US -- NBSK prices remained flat in March at $880/mton. Spot tonnage is gradually becoming more available. Spot pricing on NBSK in NA appears to have eased as much as $20-30/mton in recent weeks. Trade reports suggest the $40/mton price hike on hardwood kraft pulp grades was met with stiff resistance in NA. While the NA demand story hasn't changed, it appears that export-oriented tonnes are stacking up @ mills and ports.

* RECYCLED PAPERBOARD

Is the recycled market slowing? Cascades is currently taking downtime at 2 clay-coated mills in Canada. This could simple be Cascades-specific issues, but we have received some reports that other mills in the US are running with very thin order backlogs.

While clay-coated recycled prices remained flat in March, there is a $40/ton price initiative in the market for mid March. When coupled with moderating wastepaper costs, this hike could face significant hurdles.