(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.
Shares of Fibria rose 5 percent in Sao Paulo trading to a nine-week high, the biggest rise among the stocks included in the Bovespa stock index.
Castelli said the Horizonte 2 project, along with cheaper wood and other cost savings, would bring the cash cost of Fibria's pulp to $131 per tonne in 2021, compared to $183 per tonne in the 12 months through April.
That forecast assumed an exchange rate of 3.54 reais per U.S. dollar, near its average level over the past two months.
Pulpmaker Eldorado, which has also gained competitiveness as the local currency depreciated by around a third in 2015, separately announced on Tuesday that it was preparing its first-ever bond sale, tapping investor appetite for the industry.
Eldorado scheduled investor meetings in Europe and the United States beginning on Thursday, ahead of a new dollar-denominated issuance. In March, shareholders approved a plan to sell $500 million in global bonds. (Reporting by Brad Haynes and Priscila Jordao; Editing by Chizu Nomiyama and Alan Crosby)