Virgin softwood pulp prices boost QC firm's first quarter

May 20, 2011

By: The Montreal Gazette

Longueuil's Fibrek Inc. got a boost from rising virgin softwood pulp prices in the first quarter, but is shifting recycled pulp production at its two U.S. mills toward the domestic market to improve margins, CEO Pierre Gabriel Côté said Thursday.

The North American price for bleached kraft softwood pulp for making specialty papers rose $90 U.S. per tonne in the March quarter and two industry leaders have posted a $30 increase in Europe and $20 in North America for June, bringing the North American price to a 10-year peak of $1,060.

"Inventories are low at 24 days' consumption and demand is strong, especially from China," Côté said. "This will support the June increase and possibly another. The St. Félicien mill in the Saguenay with 375,00 tonnes of annual capacity is in top shape and will soon benefit from lower energy costs."

Total first-quarter sales were $132 million, down slightly from a year earlier, because of lower sales of recycled pulp by the two U.S. mills. Earnings were $3.5 million, or 3 cents a share, vs. a $1.7-million loss.

The two U.S. recycled pulp mills, together with 375,000 tonnes capacity, had lower sales mainly because of lower exports.

Selling prices rose eight per cent, driven by higher waste paper prices.

The mills will supply a large U.S.-based customer with "significant volumes" of recycled pulp on a costplus basis. By 2013, such contracts will account for 51 per cent of the mills' output.

Côté said rising raw materials costs and high wastepaper prices are negatives, but "good demand for virgin and recycled pulps supports a strong pricing environment."

The Montreal Gazette

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