News from Europe Paper market

Copied off the international wire

In Europe: Demand for uncoated magazine paper is expected to ease after strong growth in 2006. Coated magazine paper demand improved in early 2007 and is expected to be moderately positive for the year. Modest demand
growth is expected for newsprint. Demand for uncoated fine paper remains good, particularly in Eastern Europe. Demand is healthy and strong order inflow is expected for coated fine paper and packaging boards. Demand for wood products is expected to be healthy in most markets. Contract negotiations for newsprint prices have been completed and prices increased by an average of 5% in Western Europe. Magazine paper prices have declined at the beginning of 2007 and may remain under pressure for non-contractual business. Further price increases are expected in uncoated fine paper, and increases are being negotiated in coated fine paper. Some moderate increases in packaging board prices are implemented. Some production curtailments are expected at Enocell Pulp Mill (part of Packaging Boards) in the second quarter of 2007 due to shortage of raw material. In wood products further product price movements are likely to reflect wood costs.

USA Market – as told through European wire
In North America: Demand for newsprint is expected to decline further. Demand for magazine paper, particularly coated magazine paper, remains weak due to seasonal reasons and underlying end-use weakness. Demand in coated fine paper is forecast to remain flat. Prices for publication papers are still declining. Coated fine paper reel prices are under pressure, but some price increases for sheet products are being negotiated.

Other Markets
In China, coated fine paper demand is expected to improve later in the spring and prices to firm up. In Latin America, modest growth in demand for coated magazine paper is anticipated, but downward price pressure is increasing. Operating cost inflation is forecast to be 2.0% to 2.5% higher in 2007 than 2006, primarily because of increased wood costs, including the impact of the Russian duties on wood.