Pulp and paper stocks are going higher

By Emerging Money>,

Shutterstock photo

The pulp and paper market is going higher for many of the same reasons other intermediate to final finished good commodities are: China is stepping up production and increasing demand. Naturally, demand and production drive each other, but the movement does not always have to be in the same direction. In this case, it appears that Chinese production is driving up demand inside the paper supply chain. Hardwood prices are firm and going higher, while softwood paper remains tight on supply issues. The best plays in this space are the global guys with cheapest costs: Brazil's Fibria ( FBR , quote ), South Africa's Mondi ( MODLY , quote ) and Sappi ( SPP , quote ). We have talked about FBR and SPP a fair amount in this space. But you can also look to the United States and see that International Paper (IP, quote ) also benefits from the overall global trend: The chart on IP is especially interesting. We have already seen a 10% move off the lows and an especially powerful technical breakthrough back at about $28. Since then, of course, the stock has surged another 6%, with 3% of that action happening today.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks
Referenced Stocks: FBR , IP , MODLY , SPP

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