Wednesday, February 13, 2008

Pulp News

Three pulp producers reported earnings today- Mercer, Catalyst Paper and Tembec. Here are some excerpts from each regarding pulp fundamentals:

Pulp markets continued to strengthen in the final quarter
of 2007, ending a year of continual price increases resulting
from both strong demand and a weakening U.S. dollar. Based
upon the current demand levels we are seeing in the market
and historically low inventory levels, we believe that there
will be continued upward pressure on pricing into the first
part of 2008.
Pulp markets were strong throughout 2007 with global pulp
shipments up 3% year-over-year and low world producer and
consumer inventories during the year.
Demand for NBSK pulp is expected to remain steady during
the first half of 2008, with the expectation that benchmark
prices will increase modestly in early 2008 followed by
potentially softer pulp prices in the second half of the year.
Higher consumption by China is expected to be offset by
weaker demand from markets in the U.S. and Europe, which
is expected to limit overall growth in demand in 2008.
Looking ahead, pulp markets should remain strong and price increases have already been announced for the March quarter.
The March price increase is another good sign. I am hoping to do an updated write-up on SFK Pulp Fund as soon as I can get a few questions answered.

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