Tuesday, November 20, 2007

Updated- More Pulp News

Yesterday, Pope and Talbot filed for Chapter 11:
Pope & Talbot, Inc. (PTBT.PK) announced today that, in order to address its financial challenges and to support efforts to be a more efficient organization, the company has filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code...

Persistent record low demand for lumber, high priced pulp chips and sawdust, the appreciation of the Canadian Dollar and the high cost of debt service have combined for an untenable business environment.
And today, the company announced wood pulp price increases:
Pope & Talbot, Inc. today announced a $30 price increase to its customers in North America and Europe.

Concurrently prices into Asian markets will be increased by $20 per ton. All prices are effective December 1st and valid until further notice.

This is on top of the $20 price increase in November, and will bring the new price to $900 in North America. In addition, the Canadian dollar has finally eased from its relentless climb. These are encouraging trends for SFK Pulp. By my calculations, Pope and Talbot's pulp operations would still require another $50 in price increases just to make them EBITDA neutral (Assuming 1.01 CAD/USD exchange rate). It will be interesting to see in the coming months whether they will be able to exert even more pricing power.

But in the meantime, SFK did cut its distribution down to $.01 unit, and at the current pace the 4th quarter numbers look like they will be very weak.

From Tembec's 4th quarter earnings report:
Reflecting the strength of the pulp market, inventories were at 19 days of supply at the end of September, down from 20 days at the end of the prior quarter.
And from Catalyst's Earnings Report:
Global NBSK pulp markets continued to be strong with global
pulp shipments up5.2% in Q3 year-over-year and 2.7%
year-to-date. Strong demand and low inventories prompted
NBSK price increases of US$10 per tonne to US$30 per tonne,
effective September 2007. The average Northern Europe NBSK
benchmark price in Q3, 2007 was US$810 per tonne, up US$27
per tonne, or 3.4%, from Q2, 2007. Compared to Q3, 2006,
the average benchmark price increased US$100 per tonne, or
14.1%.

1 comment:

Lawndale1 said...

Mercer unveils another softwood pulp price increase

BRUSSELS, Nov. 13, 2007 (RISI) - Mercer (O-MERC) has revealed plans to raise its northern bleached softwood kraft (NBSK) pulp prices by $30/tonne worldwide from December 1.

The hike would take levels in North America and Europe to $880/tonne and in China to $770/tonne. Softwood producers are currently trying to raise their NBSK prices by $20/tonne to $850/tonne in Europe.