UPDATE: BMO Capital Markets Reiterates Underperform Rating, Lowers PT for Mercer International

In a report published earlier today, BMO Capital Markets reiterated its Underperform rating for Mercer International

, but lowered its price target from $7.00 to $5.50. BMO Capital went on to say “We consider May pulp statistics negatively. May world pulp producer inventories increased an estimated 31,250 tonnes to 3.896 million tonnes. The 10-yr average decrease in May is 69,000 tonnes. The industry operating rate was relatively low at 90%. Year-to-date pulp shipments were up 1.8% from the corresponding period in 2011 owing to a 21.8% increase in Chinese buying. We do not believe this increase in demand is sustainable. Shipments to Europe were 5.85 million tonnes, down 484,000 tonnes from the same period in 2011, a reflection of the shrinkage in paper demand. According to FOEX, the European NBSK price is $835/tonne, down $20/tonne in the past month. Our NBSK price forecasts are $835/tonne for 2012 and $830/tonne for 2013.” Mercer International closed yesterday at $5.73.