Report form Deutche bank after visit to Latin and South America
No signs of a looming surge in South American white paper exports.
There are only 2 major Latin uncoated white paper producers:
International Paper and Suzano.
Both are focused on producing for the local (Brazil) and regional (South America) markets. All other Latin players are focused on expanding market pulp capacity for exports. A constant message was, "produce pulp in low-cost locations, produce paper close to the customer."
The falling US$ has been "good news/bad news" for many Latin companies.
The bad news? Most firms produce US$-denominated commodities, typically with most costs in local currencies. Thus, as the Brazilian and Chilean currencies have appreciated, production costs have risen in US$ terms. The good news? The Latin producers still enjoy among the lowest costs in the world. At the same time, rising currencies and other issues are forcing high-cost producers in Canada & Europe to shutter capacity. This is resulting in higher-than-expected prices.
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