Fitch: Fuel, Transport Costs & Poor Demand Dampen U.S. Paper and Forest Industry in Q3

CHICAGO--(BUSINESS WIRE)--Nov. 30, 2005--The U.S. paper and forest products industry sustained an unexpectedly disappointing third quarter as lower volumes collided with lower prices, as is discussed in a Fitch Ratings report. Operating profits from lumber, uncoated papers, and boxes retreated versus the second quarter in what is traditionally a good period for these products, reflecting poor demand, and high fuel, transportation, and labor costs.

'The industry's reaction has been swift, with more capacity closures and more projects to generate power from wood waste,' said Dennis Ruggles, Director, Fitch Ratings. 'These actions create additional price support and should lower costs but are no substitute for an absent growth in volumes.'

Average prices fell in Q3 despite panic buying of lumber and panel products because of the hurricanes. On the paperboard and containerboard side, production loses due to regional power outages likely kept prices from falling further than they did.

The full report, 'Paper and Forest Products Third-Quarter 2005 - The Unexpected' is available at www.fitchratings.com under the header 'Corporate Finance' then 'Corporates,' then 'Special Reports.'

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