paperloop.com
HELSINKI, July 13, 2001 (Reuters) - Morgan Stanley Dean Witter said on Friday that it saw pulp prices bottoming out at $460 per tonne in the third quarter -- six percent below current levels -- and lowered its pulp forecasts through the end of 2003.
The investment bank said that $460 was the cash cost of producing for the highest-cost producers, so it should represent the very bottom of pricing in the current cycle.
But MSDW said in its morning preview note that it was not lowering its earnings forecasts for the major European paper producers as the integrated manufacturers have little or no exposure to prices of market pulp.
The major European producers include the world's second biggest papermaker Stora Enso and third biggest UPM-Kymmene, Finnish M-real, Norwegian Norske Skog and the European operations of South African Sappi.
"It would take lower paper price forecasts for us to reduce our earnings estimates," MSDW said. "So far, aggressive producer downtime has kept paper prices from collapsing, however, we do expect second-quarter results to be down from the first quarter and the risks to our estimates for the full-year 2001 remain to the downside."
Prices of long-fibre pulp have dropped 31 percent this year, to current levels around $491 per tonne as the global economy has cooled and manufacturers of fine paper have sharply curbed output to take up slack in global demand.
But paper prices, which usually follow pulp prices, have held up better than in previous downturns. The European papermakers' second-quarter earnings reporting season will start with Stora Enso's report on July 26.