Suzano Papel e Celulose SA (SUZB3) and Fibria Celulose SA (FIBR3), Brazil’s best-performing paper makers this year, rallied as Goldman Sachs (GS:US) Group Inc. recommended buying the stocks, citing higher pulp demand and lower supply.
Fibria advanced 4.3 percent to 27.29 reais at 2:37 p.m. in Sao Paulo trading, the biggest gain today on the MSCI Brazil/Materials Index, which was little changed. Suzano added 2.4 percent to 8.79 reais, the second-biggest advance on that gauge. The benchmark Ibovespa index slid 0.5 percent.
Goldman Sachs boosted its recommendation on both stocks from the equivalent of hold, citing a 26 percent increase in Brazilian pulp sales to China in August. Fibria and Suzano will also gain as the decision by Chile’s Empresas Copec SA and Finland’s Stora Enso Oyj to postpone the opening of a plant in Uruguay to the first quarter of 2014 reduces supply, according to Goldman Sachs.
Fibria and Suzano “are best positioned to benefit from improved demand,” Marcelo Aguiar, Diogo Miura and Humberto Meireles, analysts at Goldman Sachs, wrote in a research note to clients. “Both stocks have already significantly outperformed the market year-to-date, but this has largely reflected depreciation of the Brazilian currency and higher pulp prices in 2013.”
Suzano gained 25 percent this year and Fibria advanced 20 percent while the real weakened 6.9 percent.
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