By Lucia Kassai March 17 (Bloomberg) -- Fibria Celulose SA and Suzano Papel & Celulose SA surged in Sao Paulo after an earthquake in Chile curbed pulp supplies and led Fibria to boost prices. Goldman Sachs Group Inc. raised its rating on both stocks and said there may be room for more price increases. Suzano climbed as much as 6.9 percent to 23.09 reais, the highest intraday price since Aug. 11, 2008. The shares traded 5.1 percent higher at 22.70 reais as of 1:16 p.m. New York time. Fibria, the world’s biggest producer of pulp, climbed 4.1 percent to 38.56 reais, the biggest gainer on Brazil’s benchmark Bovespa index, which doesn’t include Suzano. Chile’s magnitude-8.8 quake and tsunami last month damaged units of Celulosa Arauco & Constitucion SA and Empresas CMPC SA, which produce about 10 percent of the world’s supply of pulp. Pulp consumption will top output by 1.8 million tons in 2010 through 2012, which may prompt some producers to restart old and higher-cost mills to meet demand, Goldman Sachs analysts Marcelo Aguiar and Pedro Grimaldi said today in a note to clients.“In our view, pulp prices are at an early stage of a potential ‘super-cycle’ which is not reflected in current stock prices,’’ the analysts wrote. “Supply constraints should keep the market tight even with conservative forecasts for demand recovery.”
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Goldman raised its rating on both Fibria and Suzano to a “buy’’ from “neutral.’’ Fibria plans to raise pulp prices by $50 per metric ton starting April 1, according to an e-mailed statement sent today by FSB Comunicacoes, the press-relations firm that represents the company. Output cuts in Chile because of the earthquake made room for the price increase as demand outpaces supply, said Felipe Ruppenthal of Geracao Futuro Corretora. “The scenario is favorable for price increases, as global stocks are low and demand is pretty strong,” said Ruppenthal, an analyst at Porto Alegre, Brazil-based Geracao, which manages 7 billion reais ($4 billion) in assets. “Supply from Chile, a major producer, is not back to normal yet.” To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net Last Updated: March 17, 2010 13:21 EDT
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