October 4, 2010 / 2:20 PM / 8 years ago

UPDATE 1-Fortress Paper gets two contracts in China

* Says both agreements for five years

* To supply 84,000 ADMT of dissolving pulp annually

Oct 4 (Reuters) - Fortress Paper Ltd FTP.TO entered into agreements to supply dissolving pulp to two producers of rayon products in China, as the Canadian company looks to hedge against a volatile pricing environment.

The Vancouver, British Columbia-based maker of specialty paper will deliver a total of 84,000 air dried metric tons (ADMT) of dissolving pulp annually for five years.

The selling price will be based on the prevailing market prices in China and in the range of $1,200-$1,600 per ADMT, Fortress said.

Fortress will begin supplying dissolving pulp from its specialty cellulose mill in the third quarter of 2011, the company said.

The mill is expected to have a production capacity of more than 200,000 ADMT per year upon its completion in mid-2011.

Dissolving pulp is a chemically refined, bleached pulp composed of pure cellulose fibers. It is used in the production of rayon, acetate and a variety of specialty products.

Fortress shares were up 28 Canadian cents at C$39.48 in Monday morning trade on the Toronto Stock Exchange.

The stock has risen more than four-fold in value this year and hit a lifetime high of C$40.34 late September, helped by strong global demand and tight inventories of paper pulp. (Reporting by Ashutosh Joshi in Bangalore; Editing by Anne Pallivathuckal)

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