<B>Pulp Substitutes Continue Run</B>

The pulp substitute market continues its run as the pulp market has swelled over the past several quarters. Hard white shavings and cuttings have been the big beneficiary of steadily increasing pulp prices.

Despite pulp prices jumping in large increments there continues to be tight balance with very little excess supply on the market. Offshore orders continue to be available, which is allowing for increased movement of the grade. A concern is that several pulp substitute grades are overly dependent on a handful of buyers. If mill buyers in these countries opt out of the market prices could post sharp declines.

On the positive side there are signs that Europe is coming back into the market for a number of paper stock grades. The summer is typically when much of Europe "closes down" for vacation. With the slowdown in operation there is very little movement in or out of the country. With the end of the summer nearing, European operations are starting to restart.