Question-and-Answer Session
Operator
Certainly. (Operator instructions) And our first question comes from the line of Mark Wilde from Deutsche Bank. Please go ahead.
Mark Wilde -- Deutsche Bank Securities
Good morning.
Tom Howatt
Hey, Mark.
Dan Trettin
Hey, Mark.
Mark Wilde -- Deutsche Bank Securities
Tom, one issue that I had a question on kind of right off is just the benefit that you are assuming in the fourth quarter from lower fiber cost and lower natural gas cost. Can you guys tell us kind of what’s baked into the guidance at this point?
Tom Howatt
Scott, why don’t you take that one?
Scott Doescher
Sure. Mark, I can tell you that with regard to pulp when we had done our projections we had assumed modestly lower pricing. Certainly signs over the last couple of weeks are that pricing may fall off even quicker than anticipated but I would tell you that at this point our assumption is for market pulp to fall off modestly.
Natural gas, which as you know is another important input cost for us, we do have a portion of that hedged. In fact, a large portion of those prices protected or that price protected over the fourth quarter and that price is about 20% below what we had realized in the third quarter of the year. So, sequentially natural gas price is down about 20%.
Mark Wilde -- Deutsche Bank Securities
Okay. All right. I mean I am just – I am kind of surprised here just given all of the reports that (inaudible) about both pulp and waste paper prices that there is not a little more benefit there. Are there some contracts that may kind of affect all these spot prices that we hear about in the market either affect you or don’t affect you?
Tom Howatt
Our contractual arrangements, Mark, are relatively limited with respect to market pulp both in terms of volume and in terms of any impact on price. So, we will ultimately market price. In some cases there may be an indexed arrangement that take some time to work its way through to our actual cost structure. But I think really the issue at this point is that as we put together our forecast for the quarter we’ve assumed a relatively modest fall-off. Based on what we all are reading in recent days there clearly is a likelihood of a more significant decline, but at the same time that also raises the specter of demand decline and potential impact on paper prices as well.
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