• Mondi trading/COVID update focussed on liquidity (EUR 1.5bn available, with dividends suspended): Discretionary spend and all non-essential CapEx halted and some of their major projects slowed
    (FY 20e CapEx: c. EUR 600m, previously: EUR 700-800m). Annual mill maintenance shuts postponed to H2 20e. Q1 20A underlying EBITDA down 18% y/y (+1% q/q). Towards the end of Q1 20A and early into April, UFP order books in Europe and SA came under pressure, driving downtime at the Neusiedler mill (Austria: Has 4 PMs) and the Merebank mill (SA: 270ktpa).
  • Mondi converts production line at its Gronau plant in Germany: The plant normally produces materials used in hygiene products.
  • Mayr-Melnhof Karton keep 2019 dividend flat y/y ahead of AGM  
  • Concerns over keeping paper waste collection running in Europe: OCC prices increased by 16% w/w. Likely to see support for virgin fibre.
  • DS Smith to increases testliner prices by GBP 30/t in the UK: This applies to both brown and white grades. Price increase is on the back of increased input costs (incl. PfR) and good demand.
  • Progroup’s new 750ktpa testliner project in Germany continues:  Ramp-up expected in August 2020 at a cost of EUR 465m (EUR 620/t). This increases their total containerboard capacity to 1.85mt.
  • Pulp prices stable: Pulp sellers have seen significant increases in logistic costs. There has been solid to good demand (April order books developing positively). Strong tissue demand but concerns around P&W continue. Pulp sellers have seen significant increases in logistic costs.
  • Metsa Board could add an incremental 900kpta of pulp capacity: If approved, 1.5mtpa of HW and SW to replace existing capacity at its Kemi site (620ktpa currently). 
  • Price stability for P&W seems most likely outcome, for now: Demand was okay due to strikes in Finland COVID impact on China. However, orders have dropped off significantly amid the working from home environment and school closings. Some market participants believe there could be a 20% permanent loss in demand.  
  • Sappi pay cut and no FY 20e STI bonuses: Due to the uncertain trading environment, the board and regional leadership teams (Europe, North America, Southern Africa and Trading) volunteered a 10% reduction in salaries/fees for the three months ending June 2020.
  • Temporary lay-offs, the flavour for the next few months: Stora Enso could see temp layoffs (up to 1,500 employees) at four mills. Could affect its Veitsiluoto (CM reels and UWF: 850ktpa with 3 PMs) and Oulu (1.08mtpa: CWF with 2 PMs) graphic paper mills, as well as its Enocell (430ktpa of DWP) and Sunila (370ktpa of BSKP) pulp mills in Finland. Stora is still planning to close PM6 and convert PM7 to kraftliner production. Production currently up and running at all of its mills. SCA potential temp layoffs at its Ortviekn mill (640 employees and produces UWF and CM reels: 3 PMs and 775ktpa). Arctic Paper production up and running at all mills currently. Temp ST work allowance at Munkedal mill (160ktpa of uncoated graphic paper on 2 PMs) and Grycksbo mill (225ktpa of coated graphic paper).

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