Paper

Rolling into the first few months of the year, paper stock markets have started to stabilize. The industry does not appear to be overly concerned, as the trend line still points to fairly upbeat strength in the market.

Paper companies are focusing on several areas, such as whether some forest products companies will be able to push through price increases for their finished products.

The market pulp industry is showing more strength, lobbying for pulp price increases at the end of December. The strength in this grade will likely strengthen many of the pulp substitute grades, as well as a number of de-inking grades. Many pulp producers in North America have been able to remove excess capacity through downtime earlier in 2004, which has helped tighten markets.

Although some de-inked grades could benefit from higher pulp prices, a number of other office-based grades are being forced downward. As domestic tissue mills drive these prices, some question remains about how aggressive the tissue industry will be during the early part of the year.

For the low grades, especially OCC, attention again returns to China. While buying from China had eased a bit toward the end of December, more vigorous buying in early 2005 could boost OCC prices.

Significant snow in parts of the United States could also curtail new generation and slow shipments of low grades.