Brazil's Fibria says Asia customers resistant to pulp price hike
By Alberto Alerigi
SAO PAULO Oct 23 (Reuters) - Brazil's Fibria Celulose SA, , the world's largest producer of eucalyptus pulp, has found Asian markets resistant to a recent price hike, a senior executive said on Friday, suggesting an end or pause to a three-year wood pulp rally.
Fibria's head of sales, Henri Philippe van Keer, said on a call to discuss third-quarter earnings that the company had started implementing a $20 per ton price increase globally last month. Despite solid demand in Asia, clients there have resisted higher prices, he added.
"We could see a reversion of that increase or we could see a consolidation. It will depend on other players in the market," van Keer told journalists, adding that Fibria will try to fully implement the September price hike before considering another.
Weaker demand from a slowing Chinese economy has battered the price of several Brazilian commodities, such as iron ore, but wood pulp has resisted the rout so far.
Earlier in the day, Fibria posted a quarterly loss of 601 million reais ($155 million) as a tumbling local currency drove up the cost of foreign debts, according to a securities filing.
The net loss was bigger than a shortfall of 359 million reais a year earlier, although operating profit more than doubled in the period.
Rising global pulp prices in dollars, combined with a sharp drop in Brazil's currency, the real, drove up Fibria's net revenue 60 percent in reais. Earnings before interest, taxes, depreciation, amortization and one-time expenses soared 153 percent to 1.551 billion reais.
Rising debt costs in reais have an immediate accounting impact on earnings, while the benefits of a stronger dollar are sustained and accumulative for Fibria.
Shares of Fibria rose 2 percent in Friday trading and have rallied 76 percent so far this year, as the Brazilian currency lost 32 percent against the dollar.
($1 = 3.8839 Brazilian reais) (Writing and additional reporting by Brad Haynes Editing by W Simon)
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