UPDATE 2-Brazil's Fibria raises capacity of new wood pulp project
(Adds share performance, Eldorado bond sale, economic context)
By Brad Haynes and Priscila Jordão
SAO PAULO May 31 (Reuters) - Brazil's Fibria SA, the world's largest producer of eucalyptus pulp, raised the output forecast for its Horizonte 2 plant, lifting shares to a two-month high and highlighting appetite for a rare Brazilian sector in full expansion.
Chief Executive Marcelo Castelli told investors on a call Tuesday that the Horizonte 2 plant in central-west Brazil will produce 1.95 million tonnes of wood pulp at full capacity, up from a forecast of 1.75 million tonnes last year.
Horizonte 2 is one of several major wood pulp projects coming online in Brazil over the next few years, underscoring its competitiveness as a commodity exporter and threatening to undercut rebounding pulp prices from Europe to Asia.
The new Fibria plant, along with rival Klabin's Puma Project and Eldorado Brasil's Tres Lagoas expansion, represent some of the biggest active capital spending projects in Brazil, where a recession has hammered domestic demand but encouraged exports through a weaker currency.
Castelli said the broader economic slump had given Fibria the chance to hire the best possible engineers for Horizonte 2 and negotiate contracts with many suppliers on favorable terms.
Fibria has the option to delay some of the project's $2.4 billion investment, spending 86 percent rather than 94 percent of the budget this year and next, he said, adding that the new plant may still start sooner than first forecast, in late 2017.
Fibria spent 15 percent of the project's investment budget by April and completed a third of physical progress, he said. Continuación...