Deutsche Bank Reports Summaries
080512 Deutsche Bank Report - Dr. Paper's Pulse on Pricing
Deutsche Bank - Equity Research
Panels continued to rally. The structural panel composite jumped
$11/msf this week to $316/msf - - - after bottoming @ $270/msf in
early February. The benchmark grade of OSB (7/16" in the North
Central region) rose $15/msf to $177/msf. Ainsworth, Norbord,
Canfor, GP, and Weyerhaeuser have recently announced idling and/or
permanent closures in OSB (4 OSB mills w/ 1.76MM msf of capacity)
& plywood. As with lumber, we think that the prospect of a
prolonged downturn may force further (and deeper) restructuring as
we move through 2008.
* MARKET PULP
NBSK prices remained flat in April at $880/mton. The collapse of
a sale to the Sinar Mas Group has forced the closure of Pope &
Talbot's 3 west coast NBSK mills. Maintenance in NA as well as
greater-than-expected downtime in Europe should tighten the market.
Spot pricing on NBSK had been slipping, but seems appears destined
to firm with the Pope closures. There is already talk of a $40/mton
hike on fluff pulp. Hardwood remains in balance and is the tighter
of the markets.
* COATED GROUNDWOOD
Prices rose $60/ton in April on most LWC grades, and they rose
$75/ton for No. 5 40-lb offset rolls. Q1 shipments rose an
impressive 10.3%. Anecdotally, some of our contacts in the merchant
community report that mills appear to have more tonnage available.
On the demand side, contacts in the printing distribution community
report that high paper prices and a slower economy are triggering
reductions in some cataloging budgets. Last week, Bloomingdales
announced that it is eliminating its mail order catalog. We also
note that Abitibi-Bowater suggested it could add capacity to this
market by converting more newsprint mills to coated paper