::The Center for Paper Business and Industry Studies::

061002 Deutsche Bank Report - Dr. Paper's Pulse on Pricing

Deutsche Bank - Equity Research

LUMBER
The Random Lengths composite fell $12/mbf to $274/mbf last week.
The 10 year low for the composite was $265/mbf in November of 2002.
Some higher-cost mills are bleeding. Canadian mills are reportedly
pushing lumber across the border in front of an October 1 imposition
of a 15% export tax. British Columbia mills are dealing with yrs
worth of "beetle kill" wood and mills across NA continue to focus on
using lower-cost, small diameter logs.

CONTAINERBOARD
While reports in trade press suggest a "balanced market", we're more
cautious. Trade sources suggest that c'board is much more readily
available - 'no questions asked'. The risk is that cyclical or
seasonal slowing in Q4 could lead to pricing erosion in early '07.
With natural gas & OCC costs down, recycled mills have healthy
margins and the ability to cut prices if they need to. At the mill
level, operating rates here in the U.S. have averaged 97% YTD.
August box shipments were up 3.1%. Seasonal maintenance and the
300K/tpy Red Rock closure should get us through Q4.

UNCOATED FREE SHEET
Markets Are OK - but nothing more. Producers have deferred a
September price increase. Some in the trade are pointing to IP's
unwillingness to move. We think slower markets and some moderation
in offset roll prices are the key issues. The recently announced
combination of WY and Domtar's UFS assets makes the new Domtar the
largest UFS producer in NA and almost certainly lead to more
capacity rationalization. It looks to us like the industry needs to
cut supply by 400-500K/tons. While pricing is around "mid-cycle"
levels, high costs mean that profitability is still poor.

061002 Deutsche Bank Report - Glatfelter Land Sale Appears Larger Than Expected

Deutsche Bank - Equity Research

Glatfelter {Ticker: GLT.N, Target Price: USD 20, Recommendation: Buy}.

The sale process is underway - but on a larger scale.   GLT appears
to be monetizing, much, if not all, of its remaining 80,000/acres.
GLT has retained Landvest to sell 24,537/acres of SE. PA timber.
This is a much larger parcel of PA land than mgmts' initial guidance
suggested and implies it may be liquidating remaining acreage. It's
not hard to imagine GLT's entire portfolio generating $5-6/share in
pretax proceeds, substantial value on a stock currently trading at
$13.55/share. Earlier this year, GLT suggested that it would sell
the higher-and-better-use half (20K acres in VA, 10K each in DEL &
PA) of its portfolio and pointed to $150-200MM in proceeds.

Its not "garden variety" timberland. The 24.5K acres is close to
Washington, DC, Baltimore and Philadelphia suggests that many buyers
will approach the land from a recreational perspective --- a view
which suggests relatively high per acres values. Landvest has a
strong position in the NE US selling high-end vacation and
recreation properties.   Landvest's website (www.Landvest.com, go
to “Properties by Region” in upper right corner and
specify “Pennsylvania Timberland”) notes that the land is scattered
across 10 counties. The site notes that the “sale process will
consist of multiple bid events coupled with traditional listings,
debuting in early October of 2006.”   Landvest currently shows a
3900/acre block of timber in NW. PA (much further from the NE
corridor) under contract at $7.5MM - - - roughly $1900/acre.

The bottom line? An encouraging confirmation of a broader-than-
disclosed land sale program. We think the company is apt to provide
more color on the program during their Q3 conference call. We
continue to label GLT a "Buy" with a $20 price target.

060929 Deutsche Bank Report - Dr. Paper's Weekly Wrap Up

Deutsche Bank - Equity Research

Capacity returning. Stora's 550K CN magazine paper & newsprint mill
is restarting after 9 mo's. Labor cost cuts along w/ lower taxes &
energy drove decision.

New Euro capacity planned. Progroup bldg 650k/tpy c'bd machine in
Germany - largest in the world - w/ '09 start-up. Same old story:
gov't financing incentives drive new capacity --- even while Smurfit-
Kappa, SCA & others struggle to get mkt in balance.

Pulp appears to be topping. NBSK hikes in Europe deferred to Oct.
Hardwd hike is dead. NBSK futures prices for NA are -$20/mton from
recent highs. Restart of Terrace Bay, Ont mill will boost NA supply.