• Europe’s largest UWF producer (up to 1.6mpta) takes downtime: Navigator idles 15% (700t/day and max of 2,000) of its UWF capacity from 22 April for 30 days due to the decline in demand. Prior to this, they had their second highest order book ever until mid-March. They are implementing several cost reductions and a significant reduction to CapEx. Their tissue and market pulp output will remain the same.
  • Sappi to temporarily idle Lanaken PM 7 (220ktpa: CWF) in Belgium: According to RISI, one of the two PMs is expected to be idled due to weak graphic paper demand.
  • Bleak Grasim VSF update: “until demand picks up, price has no meaning”. Likely to see some closures, but with “some rebalancing to take time”. China supply chain is full already and VSF plants are finding it difficult to sustain operations (utilisation c.60%). Chinese VSF plants did not really stop during COVID, so inventories have built up. Demand has not recovered, and yarn capacity is running low (<40%). Before the lock down, demand from retail was good, but in the last 10-15 days, European retailers and brands have been cancelling (Grasim more shielded as 85% of their products are sold domestically). “There is no pull from the market right now”. In terms of VSF, they have permission to run three of their four factories (1 running currently).  
  • PfR jumps for the third week in a row (-6% ytd):  OCC prices +19% w/w (+19% previous week). Austrian PfR collection from households are running smoothly, but commercial collections have seen massive restrictions. Austria imports 60% of their OCC, mainly from Italy and Germany.
  • Further cartonboard and containerboard prices announced:
    Mayr-Melnhof Karton to increase recycled cartonboard by EUR 40/t from 4 May supported by a shortage of recovered fibre. DS Smith to increase all testliner grades across Europe by EUR 40/t for all new orders citing strong demand and PfR cost pressure. Burgo increases testliner by EUR 50/t from 1 May across Europe.
  • Mixed signals for pulp: Continued good demand from tissue and specialty paper; however, P&W is under pressure. Chinese pulp demand expected to normalise again in Q2. March softwood consumption increased by 3.3% m/m, while inventories increased by 6.6% m/m (supply days increased by 2 to 20). Softwood producers have announced an increase of USD 40/t (SCA and Metsä Board). Lack of recycling fibre is supportive for pulp demand.
  • Valmet results (sales +20%; EBITA +3% and net cash position).
    COVID-19 has seen negative impact on net sales in field services (mill improvement projects and energy services). Pulp and Energy: orders +87% y/y (+18% q/q) and sales +50% y/y (-24% q/q). Paper: Orders for Board, Paper and Tissue increased. Orders +76% y/y (+61% q/q) and sales: +17% y/y (-19% q/q) driven by increased orders in China and EMEA, while North and South America were down. FY 20e guidance was withdrawn on 16 April, but 60% of order backlog expected to be realised as sales in FY 20e and dividend policy intact (50% of NP). Outlook for pulp, paper and board remains “Good”, while tissue remains “Satisfactory”.      

Download Report