Moody's: Paper Industry Weak Worldwide, but U.S./Canada Demand Seen Growing

By: Mark Fitzgerald Excessive supply and weak demand will continue to hammer the paper and forest products industry worldwide -- but the outlook for North American suppliers is brightening, Moody's Investors Service concludes in a report released Thursday.

As a whole the industry's credit outlook "remains negative as weak credit conditions in North America and Europe continue to outweigh slightly
better industry conditions for Latin American issuers," Moody's said.

"The most important determinants of a company's profitability and creditworthiness are its supply/demand balance and its cost position,"
Moody's Canada Inc. senior analyst Ed Sustar said. "We anticipate continued excess supply and weak demand across most grades and regions in the global paper and forest products sector over the near term."

But in North America, Moody's said, "demand and pricing across most grades is expected to improve as the economy picks up, offsetting some negative credit trends."

Given the continuing housing slump and the unemployment rate, demand in the U.S. remains weakest for makers of wood building and producers of some grades of printing and writing paper, Moody's said.

The full report , entitled "Global Paper and Forest Product Demand Still
Weak," is available here.