Ratings: Brazil pulpmakers — UBS sees short-term price steam reversing later; raise HW price forecast to $551 from $492
(Mumbai, March 16, 2017) According to UBS Securities analysts, pulp price support is likely to continue through the middle of this year, as channel checks suggest buyers’ inventory remain relatively low
As such, the analysts, led by Andreas Bokkenheuser, raised their hardwood pulp price forecast to $551 a tonne this year from a prior estimate of $492; still, they lowered their price projections for 2018 to $480 a tonne from $500 previously.
Shares in Fibria SA, the Brazilian firm that is also the world’s No. 1 eucalyptus pulp producer, are down 15 pct this year, while those of smaller rival Suzano Papel & Celulose SA have shed 13.6 pct in the same period
Still, capacity increases projected to enter pulp markets this year — and fueled by the start of hardwood expansion by Fibria SA’s Tres Lagoas II project in Brazil – risk pressing prices down in the second half, Bokkenheuser and his team wrote in a Thursday client note
“We believe market fundamentals remain challenging over the next two to three years as supply grows twice faster than demand, putting downward pressure on prices, in our view,” they wrote
Bokkenheuser and his team are recommending shares in Brazilian paper producer Klabin SA, which they rate a “buy,” over Fibria – which bears a “sell” recommendation, the note added. (Source: Reuters via Times of India)