Pulp Market Update

Over the past several months, hardwood pulp worldwide inventories have been climbing, while the softwood inventories have been falling. There have been many mill closures with the softwood manufacturers, and the industry has witnessed and overcapacity of Hardwood production. Many of the eucalyptus pulp producers are building new capacity
and this will displace hardwood supply.
Pricing, to date, for pulp has risen steadily since the 4Q05 and has just stabilized over the
past few months.