The gross price for softwood pulp in January - September 2010 was SEK 6,776 per tonne (4,854) and for hardwood pulp SEK 6,148 per tonne (4,126). On Friday 15 October, corresponding prices were SEK 6,338 per tonne for long fibre and SEK 5,698 per tonne for short fibre. Deliveries of market pulp for the period increased to 1,552,000 tonnes (1,388,000). Södra's stock of market pulp remained unchanged, at 157,100 tonnes (157,700) on 30 September compared with the corresponding period the year before.

"We are continuing to see strong deliveries within Europe and believe that deliveries to Asia will increase. The development of the dollar will be crucial for our earning capacity," said Leif Brodén, President and CEO, Södra.

"With a two-week maintenance stop at both Södra Cell Mönsterås and Södra Cell Tofte during the last quarter, we anticipate a reduction in our pulp stocks. 2011 will see limited volumes of market pulp. Together with a continuing improvement in the situation for our pulp customers, we are still seeing a good market balance," added Brodén.

After a dramatic fall in new build construction in the wake of the financial crisis, there are signs of an upturn from record low levels. Södra's principal markets in the UK, Sweden and Norway are showing positive growth and sales in the USA are expected to increase by 50 per cent in 2011. Activities in the important renovation sector continue to be good, especially in Scandinavia.

Export volumes to North Africa are at a stable level. So far, Södra Timber has been able to make up for the strong krona through price increases in local currencies. In the short term, during the last quarter of the year, uncertainty has been growing over this issue. Increased world production and the currency situation will be determining factors and the possibility of an extended production stop over the Christmas and New Year holiday cannot be ruled out.
 
"A growing proportion of the high actual productivity increase of 2.3 per cent (1.7) is coming from contributions made by our personnel. We were able to implement 2,421 (1,502) improvement suggestions over the period," Brodén commented.

"The fact that we are able to deliver an increase in productivity during bust as well as boom periods is the hallmark of our long-term creation of value and a great tribute to our employees."

Raw materials consumption within the industry continues to be high. After the summer's record high, supply from final felling has fallen but is still at a high level. Despite tough competition for raw materials, the timber market is reaching a balance after a period of rapidly rising prices.

Demand for hard pulpwood is particularly great and Södra is therefore raising the price of all hard pulpwood range by SEK 30 per m3 as of 18 October 2010. The new price of the range of birch pulpwood will be SEK 330 per m3.

There is a pressing need to thin out the forests and in order to stimulate a continuation in high thinning activity, Södra is increasing the thinning premium on pine and spruce pulpwood to SEK 50 per m3sub. The premium will apply until 31 December 2010.

The market for solid biomass fuel is balanced with good demand and good supply.

For further information please contact:
Leif Brodén, President and CEO, Södra +46 (0) 705 58 94 26
Mikael Staffas, CFO +46 (0) 705 11 64 97
Per Braconier, Director of Communications +46 (0) 70 534 51 66