Papers Battling to Gain Traction

From Mark Wilde
Paper companies are battling to gain pricing (and earnings) traction. While prices have moved upward in many categories, margins remain anemic in most markets. Dogged by sluggish domestic demand, producers simply haven't made
much incremental headway in getting past higher costs.The good news revolves around supply reductions as well as
long-awaited benefits from the weaker US Dollar. Capacity continues to exit many markets. On the trade front, imports are falling and exports are rising. The bad news is that domestic demand continues to lag. Domestic volumes in virtually all categories are down during the first half of 2007. The net effect? While reported operating rates look constructive in many categories, underlying domestic markets have not been as tight, and pricing gains have been hard-fought in most cases