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Sappi Warns of Pulp Shortage Effects
Brussels, Belguim, 05 March 2010 -- Sappi Fine Paper Europe today confirmed that the effect of the recent massive earthquake in Chile on the global supply of pulp will put additional pressure on Sappi, and on the European paper industry as a whole, to raise prices.

The Chilean pulp industry accounts for some 8% of world output and local suppliers are advising that most mills there will be out of action for at least one month. Extensive damage to the country's infrastructure has interrupted the supply of electricity and water to many mills, as well as supplies of wood and chemicals, and affected the transport of finished product to customers. In addition, the main harbor serving the industry at Concepcion has been severely damaged.

“Even prior to the earthquake, pulp supply was proving to be a constraint to the industry in Europe, with global prices moving up in excess of 40% since April last year," said Berry Wiersum, Sappi Fine Paper Europe CEO. "The industry now faces a severe lack of pulp, which Sappi believes will result in increased pressure for steep rises in dollar based pulp prices, exacerbated for European paper producers by the weakening euro.”

Although demand for European woodfree papers has been recovering strongly in recent months, European selling prices have declined to all time lows. Against this background, Wiersum said, “Sappi will insist on the speedy implementation of its recently announced price increases for its woodfree papers in Europe,” he said, adding “We cannot rule out the need for further price increases due to these exceptional circumstances.”

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