<b>High Grades Looking to Rebound</B>

Deinking and office grades cooled last month. Despite some price declines, optimism remains strong that prices will rebound in the near term. A number of vendors point to a collective decision by a number of Canadian mills to knock down prices for sorted white ledger, coated book stock, office pack and a few other grades as the reason for the slide last month.

Other paper stock dealers see the retrenching of prices as a positive. Prices for many of these grades have soared over the past several months. A decline could cool off the chance of an overheating market.

While prices have dipped, the sentiment is starting to grow that prices could be set for a rally this spring. A number of reasons are being cited. A number of deinking mills appear to be back in the market for some of the very same paper stock grades that were previously eschewed.

Another factor for an upbeat outlook for many of the office and higher grades is the strengthening prices for pulp and many finished products.

Pulp, an indicator for the forest products industry, has seen its prices moving up steadily over the past year. There are indications that price increases again are being pushed through.

Following higher pulp prices, linerboard, corrugated medium, and various grades of printing and writing paper are seeing higher prices.

This move translates into a forest products industry that is seeing strong demand for its finished products.

Pulp substitutes are one of the biggest beneficiaries of this improvement. Higher pulp prices are translating into stronger prices for many of the replacement grades.