Will the earthquake in Chile shake up the pulp supply and drive up prices?

The deadly earthquake in Chile over the weekend resulted in the temporary shutdown of about 4.5 million metric tonnes/year of market pulp capacity. Chilean pulp mills have temporary closed due to the destruction of infrastructure and the disruption of power transmission.

The Gerson Lehrman Group (GLG) are predicting that pulp prices will rise from the current $890/tonne US up to $940/tonne by the middle of the year, due in part to the Chilean earthquake, supply problems from the flooding in the southern USA and Indonesia, and because Canadian pulp mills are scheduling maintenance downtime in April.

The GLG predict that Tembec is one of the companies that will benefit from current scenario because of their highest leverage to pulp.

The GLG also predict that paper prices will increase from $25 - $40 US per ton.

Read their analysis:
Chilean earthquake could cause pulp supply crisis and escalating prices (Gerson Lehrman Group)