- PfR availability becoming more problematic: OCC prices increased by 19% w/w (+16% previous week). Concerns around availability of PfR grades, especially generated from the office paper and printing segments.
- Cartonboard and containerboard prices start to rise: RDM increases recycled cartonboard by EUR 40/t (with immediate effect) driven by cost inflation (specifically PfR). Hamburger Containerboard increases testliner prices by EUR 50/t (effective 1 May) for brown, white and coated grades.
- Packaging supply could tighten as Stora Enso considers temporary layoffs: This could impact its Varkaus mill (390ktpa of kraftliner and 310ktpa of unbleached kraft pulp); Heinola mill (300kpta of semi-chemical fluting) and its Imatra mill (1.1mtpa of cartonboard and specialty packaging paper and 300ktpa of semi-chemical fluting).
- Covid caps Sack kraft paper prices, for now: Prices have been flat, with some potential for price increases in Q2 (we note that transport costs have been rising). Order books are good for April and into May but uncertain thereafter, with lead times having increased from 3-4 weeks to 3-6 weeks. Q2 is usually strong for demand. However, construction industry has slowed or stopped in some countries (cement bag producers likely to be under pressure). Encouragingly, the food sector has been holding up well and driving strong demand for paper sacks and bags (flour and potatoes).
- Italy sending mixed signals: Transport of waste materials has been disrupted. However, most paper mills have not reported disruptions. Commercial printing has either stopped or materially reduced production due to lack of orders from retail.
- IP discontinues newsprint and switches to kraft paper production: This is at their Kwidzyn mill in Poland and impacts PM3 (capacity: 112.5ktpa).
- Newsprint hit hard; structural decline normally 7-8% p.a. but this year could be as high as -20%. Prices have been under pressure due to oversupply. Producers in Russia and Canada have been offering much lower prices into Europe. Publishers across Europe have stopped printing free daily newspapers. Accordingly, advertising has plummeted. Lockdown potentially to increase switch to online platforms permanently.
- Downtime already starting to filter through: UPM has taken temporary downtime at two of its graphic paper mills in Finland (720ktpa: newsprint, SC, LWC and 650ktpa: SC and specialty paper). This is part of a wider group strategy to adjust to COVID. Norske Skog has also temporarily stopped SC production in Norway (220ktpa).
- Finpulp still attempting to bring more pulp to the market: Previously, their proposed 1.2 mt SW pulp mill (EUR 1.6bn) was rejected for environmental reasons. UPM restarts construction at its pulp mill in Paso de los Toros (Uruguay). The mill was scheduled to start-up in H2 22e with a capacity of 2.1mt of BEKP.
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