(Reuters) - Fortress Paper Ltd (FTP.TO) said it ramped up production of highly refined dissolving pulp, used in making rayon products, and increased its shipments to China, sending the company’s shares up 16 percent.
Production at the company’s specialty cellulose mill in Thurso, Quebec has averaged 92 percent of its targeted capacity during the last 10 days, Fortress said.
The mill, which has an annual production capacity of about 200,000 tonnes, started production in December.
“We expect our dissolving pulp segment to provide a meaningful contribution to our financial results as the year progresses,” said Chief Executive Chad Wasilenkoff.
As newsprint demand continues to decline, paper companies such as Vancouver-based Fortress are looking at alternatives to arrest sliding sales and share price.
Fortress last year converted a pulp mill in Quebec to produce dissolving pulp. Rayon made from this variety of pulp is in high demand as textile companies look to move away from expensive cotton.
To boost its output of dissolving pulp, Fortress has already agreed to buy the assets of a non-operating pulp mill in Lebel-sur-Quevillon, Quebec.
The specialty paper producer’s shares hit a three-week high of C$22.80 on Monday on the Toronto Stock Exchange.
Reporting by Krishna N. Das in Bangalore; Editing by Sreejiraj Eluvangal