Jul 27 2010
www.RothmanResearch.com studies the market environment influencing investors' trading decisions on the paper industry players in recent time providing in depth research on Boise Inc. and Fibria Celulose SA. Register for a free membership today on our website to have complete access to these complimentary reports and more.
The economic crisis, partnered with increased electronics use and environmental concerns, has made the Paper and Paper Product Industry an uncertain one. Companies are currently reporting their second quarter earnings with mixed results, and predictions for the third quarter remain unclear. Although, earnings are not expected to return to pre-crisis highs, there are expectations that the industry will show improvement over last year. Two companies that are expected to gain a lot from an improved industry are Boise Inc. (NYSE: BZ) and Fibria Celulose S.A (NYSE: FBR).
Concerns for the next quarter involve increased prices of hard and soft woods used in paper production, which are themselves being affected by increasing sawlog costs.
China took the lead in the world Paper and Paper Products Industry from the USA in 2008, and has managed a 162% surge in the paper industry over the past 8 years. Studies have recently revealed that this take over was not lead by innovation or reduced production costs but in fact by huge government subsidies totalling over $33.1 billion since 2002.
However, increased costs of paper pulp in 2010 could spell trouble for China's Paper Industry's profitability. Profit margins are being greatly reduced as pulp procurement now accounts for around 65% of production cost. As increased production costs filter into increased product costs, demand is likely to be reduced.