Fortress Global Enterprises Inc - Class A FTPLF

Dissolving Pulp Pricing

[Nighthawk40]

Except possibly for Steady, no one on this board really understands the dynamics of dissolving pulp pricing.

However, I do have a reasonable fact based reply:

FTP entered into (2) pulp supply agreements that each have a term of 5 years. Minimum price of U.S. $1,200 per ADMT and a maximum price of U.S. $1,600 per ADMT.

Even Chad doesn't fully understand the dynamics of dissolving pulp pricing.

Chad states "These dissolving pulp supply agreements will provide a hedge against potential volatility in future dissolving pulp prices which we believe should provide greater normalized operating results in this segment".

We also have the following demand trends as of Nov. 2010:

1. "The rayon market alone has grown 7% globally.

2. "In China, the rayon market is growing at a rate of 10% annually for the last 5 years. Those numbers are only expected to increase as regulations on cotton and depleting supplies impact what used to be the textile industry's go-to fibre.

There is no guarantee that future dissolving prices will continue their upward trend. But unless there is suddenly a drastic reduction in rayon demand, the probability favours an overall upward trend in dissolving pulp pricing for the next few years.

As the people in China become more affluent, so too will their need for better clothing. Like cars, its a status symbol.

Nighthawk40