Industry Reports

Deutsche Bank Reports Summaries

080421 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (4/21/08)

Deutsche Bank - Equity Research

* COATED GROUNDWOOD

Prices rose a notable $60/ton in April on most LWC grades, and they climbed $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 cataloguing budgets. We are also trying to gauge any inventory build-up in the supply chain.

* CONTAINERBOARD

The market appears largely balanced, with a slight bias to the downside on spot tonnage. At this point, the $50 spring hike appears dead, with revival in late summer being the "best case" scenario.  Meanwhile, there are increased reports of discounting in the "spot" market. For now, such discounting remains very limited in tonnage terms. However, fundamentals require monitoring. Downstream box demand remains sluggish, and inventories have been trending higher the last several months.

* LUMBER

Closures driving upturn. It's a bit late, but capacity shutdowns are generating a pick-up in prices. The Random Lengths composite price rose $8/mbf for the second straight week to $255/mbf. The uptick was driven by increased seasonal demand and the announcement by Canfor of 600K mbf/yr in capacity closures.