Pulp and Paper Canada

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Better results expected soon


July 1, 2008
By Pulp & Paper Canada

Industry analysts have recently reported that cost cuts and higher prices for wood products should lead to better results for companies that make pulp and paper products. Northern bleached softwood kr…

Industry analysts have recently reported that cost cuts and higher prices for wood products should lead to better results for companies that make pulp and paper products. Northern bleached softwood kraft (NBSK) pulp, which has been stable at around US$880 a tonne the past year, is expected to increase to US$900 a tonne in the summer.

Paul Quinn, an analyst with RBC Capital Markets, says that companies like Domtar and AbitibiBowater will be able to raise prices after having reduced production capacity, which helped balance their supply with decreasing demand. AbitibiBowater also will benefit from higher prices for newsprint and groundwood paper, he notes.

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North American list prices for newsprint are about US$690 a tonne, up $100 since the low of 2007. Producers are trying to push through increases for July and August. This would bring list prices to between $770 and $790 US, if the increases stick, analysts say.

Peter Ruschmeier, an analyst with Lehman Brothers, points out that wood product prices are improving after reaching long-term lows in the first quarter. He said companies like Weyerhaeuser and AbitibiBowater might report larger profits as a result. Ruschmeier points out that prices for lumber, oriented strandboard and plywood are higher than he had originally expected, although the prices of lumber and plywood are beginning to soften somewhat.


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