Industry Reports

Deutsche Bank Reports Summaries

061218 Deutsche Bank Report - Dr. Paper's Pulse on Pricing (1/8/07)

Deutsche Bank - Equity Research

MARKET PULP

Producers and customers increasingly believe January's planned $20/mton will be successful.  Robust global demand, up 4.4% YTD, and tight supply is supporting higher pulp prices.  Global inventories remain low at 29 days of supply.  New supply is gradually ramping up in Chile.  Arauco's Nueva Aldea started up last month and CMPC has reportedly started up its Santa Fe # 2 line; both lines however are running slowly with limited production.  Terrace Bay Pulp restarted its 350k/mtpy NBSK line in Ontario. 

LUMBER

The Random Lengths composite rose $3/mbf to $299/mbf last week.  Prices are well above the 10-yr low of $265/mbf - recorded in November of 2002.  However, that low was reached at a time when the CN$ was very weak - - - suggesting that mill nets at many CN mills are significantly lower today.   

PANELS

The structural panel composite rose $1/mbf to $273/mbf last week.  The benchmark grade of OSB (7/16" in the North Central region) fell $5/mbf to $153/mbf.  We believe OSB is below "delivered cash cost" for some mills and regard further shuts as inevitable.  LPX, Ainsworth, Kruger and Tembec have announced capacity withdrawals.