Aracruz upbeat on pulp outlook

Aracruz' CFO, Isac Zagury, has given a positive prognosis on eucalyptus pulp for the next quarter, after experiencing record revenues of $325 million from April-June, 12% higher than the year-earlier period. However, net income was down 36% at $56.4 million.

"With limited capacity coming on stream, lower inventories at the buyers and the sellers and planned downtime in Chile and Indonesia, as well as the increased international demand from additional sources due to the Finnish strike, we are optimistic on the outlook," the CFO indicated.

Zagury also announced Aracruz' decision to bring forward a maintenance stop at its massive 2.4 million-mtpy Barra do Riacho plant in Espirito Santo state, southeast Brazil, from November to August. The halt will remove 65,000 tonnes of bleached eucalyptus kraft pulp from the market.

Aracruz shipped 47% of its pulp output to Europe during the second quarter, up from 42% in 2004. Europe's papermakers bought more hardwood than usual as the storm in Sweden in early 2005 reduced supply. And with Finland's pulp mills out of action for seven weeks during the second quarter, the firm expects pulp supply to tighten up further.

"I personally don't believe the full impact of the Finnish strike has shown up in the market yet," the firm's chief marketing and sales officer, Joao Felipe Carsalade, told analysts. "We'll probably see the impact turning up in August and September," he indicated.

Aracruz also hopes for an improvement in demand from China later in the third quarter.

Back home in Brazil, Aracruz was pleased to report a successful startup at the 900,000-mtpy eucalyptus pulp plant, Veracel, its joint venture with Stora Enso. "The learning curve is going well and the targets will be achieved," Zagury indicated. The plant is on track to reach its target output of 360,000 tonnes of pulp next year before reaching the top of the curve in 2006.