diggg
15 years ago
FWIW:Fibria, Suzano Surge on Outlook for Price Increases (Update1)
http://www.bloomberg.com/apps/news?pid=20601086&sid=ajd18IxXR6XI
By Lucia Kassai
March 17 (Bloomberg) -- Fibria Celulose SA and Suzano Papel & Celulose SA surged in Sao Paulo after an earthquake in Chile curbed pulp supplies and led Fibria to boost prices. Goldman Sachs Group Inc. raised its rating on both stocks and said there may be room for more price increases.
Suzano climbed as much as 6.9 percent to 23.09 reais, the highest intraday price since Aug. 11, 2008. The shares traded 5.1 percent higher at 22.70 reais as of 1:16 p.m. New York time. Fibria, the world’s biggest producer of pulp, climbed 4.1 percent to 38.56 reais, the biggest gainer on Brazil’s benchmark Bovespa index, which doesn’t include Suzano.
Chile’s magnitude-8.8 quake and tsunami last month damaged units of Celulosa Arauco & Constitucion SA and Empresas CMPC SA, which produce about 10 percent of the world’s supply of pulp. Pulp consumption will top output by 1.8 million tons in 2010 through 2012, which may prompt some producers to restart old and higher-cost mills to meet demand, Goldman Sachs analysts Marcelo Aguiar and Pedro Grimaldi said today in a note to clients. “In our view, pulp prices are at an early stage of a potential ‘super-cycle’ which is not reflected in current stock prices,’’ the analysts wrote. “Supply constraints should keep the market tight even with conservative forecasts for demand recovery.”
Stock Rating
Goldman raised its rating on both Fibria and Suzano to a “buy’’ from “neutral.’’
Fibria plans to raise pulp prices by $50 per metric ton starting April 1, according to an e-mailed statement sent today by FSB Comunicacoes, the press-relations firm that represents the company. Output cuts in Chile because of the earthquake made room for the price increase as demand outpaces supply, said Felipe Ruppenthal of Geracao Futuro Corretora.
“The scenario is favorable for price increases, as global stocks are low and demand is pretty strong,” said Ruppenthal, an analyst at Porto Alegre, Brazil-based Geracao, which manages 7 billion reais ($4 billion) in assets. “Supply from Chile, a major producer, is not back to normal yet.”
To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net
Last Updated: March 17, 2010 13:21 EDT
diggg
15 years ago
Disasters abroad give boost to Canada's pulp makers
Earthquake in Chile, strike in Finland have squeezed global supply of pulp, driving up prices and benefiting Canadian producers
Bertrand Marotte
Montreal — Globe and Mail Update
Published on Wednesday, Mar. 17, 2010 8:15PM EDT
Last updated on Thursday, Mar. 18, 2010 6:22AM EDT
Disruptions to the global supply of pulp, some related to the fallout from last month's earthquake in Chile, are proving to be a godsend for Canada's beleaguered forest products sector.
Chile, a major pulp exporter, was hit by a severe earthquake on Feb. 27 that left many forestry companies devastated and forced to halt production for an indefinite period.
Several facilities were located at the epicentre of the quake and some mills were destroyed. Others face disruptions resulting from extensive infrastructure damage as well as interruptions in the supply of electricity, water, wood fibre and chemicals.
Meanwhile, pulp producers in Finland, also major global players, have suspended work at several plants in the face of a crippling strike by dock workers that has halted most pulp exports from the country. The workers have been on strike since March 4 in a conflict over issues such as severance pay and job security.
Chile and Finland together account for more than 10 per cent of the globe's pulp market and the supply squeeze is happening just as China ramps up demand for pulp to feed continued expansion of its paper-making capacity.
The result is an unexpected rally in pulp prices, a welcome development for big Canadian pulp producers such as Domtar Corp., (UFS-T69.65-0.47-0.67%) Canfor Corp. (CFP-T8.950.010.11%) and Tembec Inc. (TMB-T1.890.084.42%)
“This is that rare opportunity,” said Kevin Mason, an analyst with Vancouver-based Equity Research Associates.
Canadian pulp makers stand to be the among the biggest beneficiaries of the runup in pulp prices because they have relatively high costs and weaker balance sheets, Mr. Mason said. A sustained rally in prices will allow them to generate significant cash flow to help repair their balance sheets and prepare for future dips and troughs, he said.
“Inventories were already reasonably snug,” but the events in Chile and Finland are putting additional pressure on the global supply situation, he said.
Domtar senior vice-president and chief financial officer Daniel Buron cited the events in Chile and Finland, as well as heightened demand in China, as a “good news” scenario for his company in the short to medium term.
Mr. Mason said the rally comes just in time.
Global prices for pulp had been expected to stabilize and then begin to fall after recovering from a steep falloff in 2008 and recently reaching $900 (U.S.) a tonne.
Many observers expect the price to soon match or surpass the $1,000-a-tonne record high set in 1995.
“If Chile stays out a little longer, we could surpass those highs,” Mr. Mason said.
Mr. Buron, however, was reluctant to go out on a limb and predict prices will reach $1,000.
“It's not impossible it goes to $1,000. But it's a tough call. We still have to assess the extent of the damages in Chile and establish how sustainable the demand in China is. We also don't know how long the strike in Finland could go on for.”
diggg
15 years ago
Chile Celulosa Arauco Pulp Mills Still Offline Following Quake
MARCH 17, 2010, 9:42 A.M. ET.
http://online.wsj.com/article/BT-CO-20100317-708260.html?mod=WSJ_World_MIDDLEHeadlinesAmericas#articleTabs_article
SANTIAGO (Dow Jones)--Chile's Celulosa Arauco y Constitucion SA, one ofthe world's leading pulp producers, said Wednesday its five domesticpulp plants are still offline as damages are evaluated and repairedfollowing a devastating earthquake Feb. 27.
Most of Arauco's operations are located in the Bio Bio region, oneof the hardest hit by the 8.8-magnitude quake that ravaged large partsof south-central Chile.
The company's Licancel, Constitucion, Nueva Aldea, Arauco and Valdivia plants suffered varying levels of damage, leading the companyto previously say that during March there probably won't be any pulpproduction at its plants in Chile.
The earthquake didn't damage any of Arauco's forests.
Of Arauco's seven saw mills, four are back in operation; of its sixremanufacturing plants, four are operating; and of its four woodpaneling plants, two are operating, the company said in a filing.
Prior to the earthquake, Chile's market pulp production accounted for about 8% of world market pulp production.
Arauco is a subsidiary of fuel and forestry conglomerate Copec SA(COPEC.SN), which is the heaviest weighted share on the Ipsa blue-chipstock index.
Copec was gaining 0.5% to 8,080.00 Chilean pesos ($15.32) midday Wednesday, while the Ipsa was also up 0.5%.
-By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929; anthony.esposito@dowjones.com
diggg
15 years ago
Chile Braces for a Major Economic Slowdown
Tuesday, March 16, 2010
By ALEXEI BARRIONUEVO, The New York Times
TALCAHUANO, Chile -- Just a few weeks ago, some 2,000 fishermen who ply the waters of this port city for sardines and mackerel were busy mending their nets and testing their rigs in preparation for the start of the four-month fishing season.
But the tsunami that barreled through here after last month's 8.8-magnitude earthquake washed away the fishing industry before the fishermen could cast their first net.
The waves tossed around fishing boats and truck-size shipping containers as if they were wood blocks in a toddler's sandbox. Boats landed several blocks inland, resting battered and broken on city streets. The waves deposited multicolored containers one-third of a mile up the beach.
The effect on the economy of this city of 250,000 residents, for whom fishing is the main industry, will be far-reaching, with city officials estimating that it could take up to a decade to rebuild homes and port facilities. And this year's fishing season, which was to begin last Monday, is lost, fishermen said.
"The disturbance in the sea caused the fish to emigrate, to disappear from here," said Alfonso Alvear, 69, a fisherman and president of a neighborhood association here. "It's as if we have to discover this fishing region all over again."
How severely the Feb. 27 earthquake will rattle Chile's overall economy, which has been the envy of Latin America for the past decade, remains to be seen. Most economists are betting that Chile's prudent economic management leading up to the disastrous quake, and the intense rebuilding effort now needed in some parts of the country, will help it weather the economic shocks better than most countries could.
But for a few months at least, a major slowdown is expected in several Chilean industries, including fishing, pulp and paper, wine and agriculture. Seaside areas like Talcahuano that were ravaged by the tsunami could take much longer to pick themselves back up.
"The harder part will be in small villages and towns along the coast, many of which lost their local economy like the fishermen did, and the lady that owned a mini market, and the guy who owned a campground," said Rodrigo Jordan, chairman of the Foundation for Overcoming Poverty, a research institute in Santiago, the capital. "They can rebuild their homes and find clothes, but how can they sustain their families without a local economy?"
The quake devastated nearly a third of the fishing industry in the south-central part of the country, where the tremor struck hardest. It destroyed more than 12 percent of the stock of Chile's wine industry. And it knocked out an important pulp and paper mill in Constitución that could take six months to repair.
Then there were the more subtle effects. The seemingly endless aftershocks -- more than 300 by Friday -- have kept many on edge, and even stressed out cows, which are producing less milk since the quake, said Marta Lagos, a Santiago economist and pollster.
The two regions affected most by the quake -- Maule and Bío Bío -- account for 13 percent of Chile's gross domestic product and nearly 20 percent of its industrial output. Concepción, Chile's second largest city and an industrial hub, was close to the quake's epicenter and was extensively damaged.
Chile's most important industry, copper, was relatively unscathed, as the quake did little to most mines, especially those in the far north of the country. Several ports will need to be repaired, which could slow exports in a variety of goods, although copper is not expected to be affected. The south-central zone damaged by the quake handles more than 20 percent of the cargo in and out of Chile, said Claudio Ortiz, frigate captain of the maritime government of Talcahuano.
"The movement of goods to ships is going to slow down," said Sebastian Edwards, an economics professor at U.C.L.A. who specializes in Latin America. "Chile is a country that relies heavily on exports, so this is going to be a factor."
But Dr. Edwards and other economists also contend that Chile could emerge with a stronger economy a year or so after the earthquake than it had before last month. The nation owes much of that rosy prognosis to the fiscal management of the past two moderate leftist governments, which have given the new president, Sebastián Piñera, palatable options for financing reconstruction, which is expected to exceed $30 billion.
Former President Michelle Bachelet's government hewed to a program of automatic savings during the boom years for global commodities, including copper. The program, along with prudent investment of the savings abroad, allowed two sovereign funds to amass more than $14 billion, money that can now be tapped for reconstruction.
"You save for a rainy day, and this is a rainy day," Andrés Velasco, then Chile's finance minister, said last Monday in an interview.
Chile also has a barely negative inflation and an enviable public debt of 6 percent of gross domestic product, among the lowest in the world, that would allow the country to borrow in foreign markets at very low interest rates.
"There are investors throughout the world that would be willing to add Chilean debt to their portfolios," Dr. Edwards said.
Most economists see Chile's economy losing about a half a percentage point to growth projections of about 5 percent this year. But by next year, projects to rebuild bridges and highways, and homes damaged and destroyed by the quake, could end up accelerating growth to even higher levels, said Eduardo Engel, an economist at Yale University.
Mr. Velasco said the government's main focus, for now, needed to be on building temporary housing to replace tens of thousands of dwellings that were badly damaged or destroyed by the quake and tsunami. In Talcahuano alone, city officials said that 106,000 people were left homeless.
Rebuilding local economies will require more creativity, said Mr. Jordan of the Foundation for Overcoming Poverty. "There needs to be a master plan for reinvesting subsidies into the local economy, to bring back tourism, to rebuild the economic cycle," he said.
Talcahuano, which means "thundering sky" in the indigenous Mapuche language, has been home to hardy sailors and fishermen for more than 200 years. But residents said Talcahuano had never experienced a wave like the seven-footer that swept over the city in early on Feb. 27.
Three people drowned along the coast, with two more still missing, Captain Ortiz said. A total of eight people died in the area, the government says.
In a seaside section of the city, residents worked earlier this month to clean up the mess. Luis Alberto Ayala, who works in a fish cannery, toured warehouses filled with thousands of tons of canned mackerel bound for export, including to the United States. Workers walked through piles of bent and rusted cans, seeing which ones could be saved.
Nearby, Marcelo Alvear, a fisherman and the nephew of Alfonso Alvear, pondered the future.
"Many of us need to work during the season to earn money to pay for school supplies for our children," said Mr. Alvear, 39. "But we can't generate anything this year. If we don't work, how are we going to take care of our children?"
His uncle shook his head.
"Right now we don't have a plan for how we are going to make a living," said the elder Mr. Alvear. "All we have is uncertainty."
diggg
15 years ago
Canadian pulp producers expected to benefit as prices rise due to Chilean quake
Published on March 12th, 2010
The Canadian Press
http://www.ngnews.ca/Business/2010-03-12/article-903583/Canadian-pulp-producers-expected-to-benefit-as-prices-rise-due-to-Chilean-quake/1
MONTREAL — Canadian pulp producers are expected to benefit from a sustained improvement in prices caused by the Chilean earthquake and a strike in Finland, analysts say.
Chile accounts for about eight per cent of the world’s supply of softwood and hardwood pulp, used in making various paper products.
Reports suggest that six of the South American country’s pulp mills have been shut since the 8.8-magnitude earthquake last month and they may remain idled at least another month.
The mills produce an estimated 3.8 million tonnes of pulp annually.
In Finland, a strike by 10,000 truckers and port workers has cut off most exports and forced newsprint and pulp mills to close. The Nordic country exports up to 1.8 million tonnes of pulp annually.
The consequence has been an increase in pulp prices in the United States, Europe, and China.
NBSK pulp prices in the U.S., Europe, and China increased by US$24.77 per tonne this week.
As of March 9, North American prices were US$900 per tonne, up US$70 this year and 42 per cent from the low of US$635 last April. European prices have risen 53 per cent from the 2009 lows.
Additional increases are expected over the next three to six months because suppliers have limited ability to build inventories ahead of normal spring maintenance downtime.
Wet weather in the U.S. South, cold weather in Northern Europe and flooding in parts of Brazil have added to the difficulties.
The beneficiaries include Canfor Pulp (TSX:CRX.UN), Tembec (TSX:TMB) and SKF Pulp (TSX:SFK.UN), Domtar (TSX:UFS) and West Fraser Timber (TSX:WFT).
Benoit Laprade of Scotia Capital said the earthquake will likely extend the pulp price bull run at least through the second quarter of 2010.A small decrease in pulp prices was anticipated in the second half of the year as paper company margins are squeezed and the full effect of the weakened Euro is felt.
“While we had been cautious on the sustainability of further increases given the potential for slowdown in Chinese demand and weakening margins for European papermakers, we now expect prices to continue to rise beyond March,” added Paul Quinn of RBC Capital Markets.All but one of the Canadian producers saw their shares gained in afternoon trading on the Toronto Stock Exchange.
Tembec was up 3.52 per cent, Canfor 2.63 per cent, Domtar by 1.1 per cent and West Fraser by 0.35 per cent. SFK Pulp was unchanged.
diggg
15 years ago
Pulp Price Surges on Chilean Quake, Finnish Strike (Update2)
http://www.bloomberg.com/apps/news?pid=20601109&sid=aN34UgtVDxAM
March 11 (Bloomberg) -- Chile’s earthquake and a Finnish port strike may propel pulp prices to a record, hastening a tightening of inventories after papermakers cut output.
The price of European benchmark pulp rose to $875.62 a ton this week, the biggest seven-day increase in almost six years, according to Helsinki-based FOEX Indexes Ltd. Pulp in Europe could top $1,000 a ton, higher than 1995’s peak, within a few months, said Kurt Schaefer, who analyses the fiber industry at Bedford, Massachusetts-based paper researcher RISI.
Mills have ground to a standstill in Chile and Finland, which together account for 12 percent of world pulp sales. The spiraling pulp price, which in turn boosts paper prices, marks a turn in the market for papermakers including Stora Enso Oyj of Finland and Norske Skog ASA of Norway, which have both spent years cutting output to restore depressed paper and pulp prices.
“The pulp market has never seen a disruption this sudden and this large,” Schaefer said. “The market is so tight at this point that every disruption is magnified 10-fold.”
The stoppages come after average pulp stocks fell to 20 days, from 50 days at the height of the financial crisis, as papermakers lowered inventories, Schaefer said. The 20-year average is 32.6 days.
Strongest in 50 Years
Last month’s 8.8 magnitude earthquake in Chile, the country’s strongest in 50 years, killed hundreds, destroyed thousands of homes and hammered pulp and timber producers in the country’s central southern region, close to the epicenter. Pulpmakers affected include Empresas Copec SA’s Celulosa Arauco y Constitucion SA unit and Empresas CMPC SA, the two largest.
Stora Enso fell as much as 1.1 percent to 4.93 euros in Helsinki trading today. Norske Skog gained 1.5 percent in Oslo. CMPC and Copec have lost 2.1 percent and 5 percent since the earthquake, while Brazil’s Fibria Celulose SA is up 8.1 percent
Only one of 35 pulp plants and sawmills owned by Celulosa Arauco is currently operating, spokesman Andres Moran said. Part of the Mutrun sawmill was swept out to sea and pools of water remain in log stores, he said. A third tidal wave also flooded an area where it stores timber in southern Chile.
“We are still in a first stage of clearing away the debris,” Moran said. “Following that we will begin an evaluation process of determining in what condition the machinery is.” The company said it probably won’t produce in March.
Finnish Strike
Norske Skog, Norway’s biggest newsprint supplier, said its Concepcion paper mill is closed and a force majeure claim is in place over failed supplies. The closure will last for “some time,” said Tom Bratlie, the Lysaker-based company’s spokesman.
In Finland, Stora Enso and UPM-Kymmene Oyj, Europe’s two largest papermakers, have closed mills and cut production as a strike by port workers that started March 4 has cut off 90 percent of the Nordic nation’s exports. The Helsinki-based companies have said it’s only a matter of days before they halt production fully as they run out of space to store inventory.
Stevedores and port operators are set to resume talks tomorrow with a government mediator after failing to reach agreement today, the Transport Workers’ Union said.
Effects on Paper
[b]“It’s a perfect storm,” Cesar Perez, a managing director at brokerage Celfin Capital SA in Santiago, said in a telephone interview. “There’s not much availability of fiber in other parts of the northern hemisphere, so that’s going to push prices even higher in the following months,” he said.
CMPC, owned by Chile’s billionaire Matte family, said March 2 it halted production at its plants because of a lack of power and water supply. The company owns three pulp plants in Chile and Argentina, where it also makes paper products.
Pulp is the main raw-material for paper, and a shortage in supply will have knock-on effects in that market too, said Timo Jaakkola, a Helsinki-based analyst with Oehman.
“Higher pulp prices will translate to higher paper prices when the paper market balance is tight enough,” Jaakkola said. “The pulp shortage will likely send pulp prices quite a bit higher for the next few months.”
M-real Oyj raised paper prices twice this month, citing the pulp shortage and cold weather in northern Europe. Finland’s third-largest papermaker announced price increases of as much as 15 percent this month, to take effect in April.
Biggest Price Rise
“We see these increases in paper prices as very important,” M-real Chief Executive Officer Mikko Helander said in an interview. “There’s going to be a shortage of pulp, and prices will continue to increase.”
One Chinese paper producer introduced Asia’s biggest price increase ever this week, raising prices by $150 to $1,050 a ton, said Sandy Lu, a Shanghai-based paper economist at RISI. It’s unclear whether the price hike will stick, she said. Lu didn’t identify the Chinese producer.
Chile’s outages “are tightening the situation and supporting a rising price trend,” Ilkka Haemaelae, chief executive officer of Metsae-Botnia Oy, a Finnish pulp producer, said in a telephone interview. “Raw materials have no other drivers than the balance of supply and demand.”
To contact the reporters on this story: Chad Thomas in Helsinki at cthomas16@bloomberg.net or Matt Craze in Santiago at mcraze@bloomberg.net.
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