• Under current circumstances, 80% of German media and printing companies unlikely to survive 2020: This is based on the Bundesverband Druck and Medien survey. 24% of companies said they would be able to survive till the end of July. 33% expect sales to drop by 50% y/y in Q2 and another 37% expect sales to fall by 26-50%.
  • Fire at Sappi’s Alfeld mill in Germany: PM3 (35kpta of SPP) at the mill was impacted by a fire last week Tuesday. PM 2,4 and 5 also produce Specialty paper with a combined capacity of 210ktpa. PM 1 produces virgin cartonboard (capacity: 50ktpa). We estimate that PM 3 generates EUR 1.5m EBITDA per quarter.
  • Lecta is calling a recovery by June: They are expecting a recovery in June when the lockdown will be gradually lifted in most European Countries. Their April orders were 25% lower m/m and are expecting a 45% reduction in CWF volumes in Q2 and 50% in UWF.  Lecta has proposed a further recapitalization and are expecting a EUR 150m liquidity injection.
  • Coated paper downtime update: Burgo comes back from CM downtime, Duino mill (Italy: 200ktpa) PM3 was idled from 27 April due to lack of demand. Norske Skog Bruck mill PM 4 (CM reels) stopped on 1 May and resumed on 14 May.
  • UWF European demand was down 4.6% in February: Prices are steady for now, supported by planned downtime (Navigator: 15% of capacity; SAP’s 200kt PM 7 at Lanaken in Belgium, MNP’s Neusiedler mill in Austria, Merebank in SA, Stora’s PM2 280kpta at its Veitsiluoto mill in Finland).
  • OCC up 33% w/w and now 52% ytd: As a read-though, Austrians produced 15-20% more household waste during the initial restrictions, while commercial waste volumes declined by up to 80%.
  • Russian containerboard down over 20% y/y: Q1 prices were under pressure due to oversupply and reduced demand during the traditionally slower winter. Virgin prices (unbleached and white-top) declined by 7% q/q, while prices were stable January – March. The spread between virgin and recycled widened further as testliner and recycled fluting dropped by 10% q/q. Supply/demand balance improved from March supported by retail, e-commerce and a weaker RUB. Testliner declined by 40% y/y and by 10% q/q in Q1. Producers margins have been under pressure with a weaker RUB and production costs partly USD based (chemicals, spare parts etc). PfR supply has been stable, which could be an opportunity for Russian testliner producers.
  • Stora obtains environmental permit for Oulu conversion to kraftliner: The mill’s pulp production will increase to 530kpta of unbleached pulp and 450ktpa of kraftliner (permit allows for up to 500ktpa).
  • Containerboard projects proceed: Pro-Gest marches on with testliner ramp-up at its Mantova mill in Italy. They aim to start testliner production during July/August. They are doubling production to 400ktpa (brown testliner and recycled fluting). Palm expect to start up their PM 5 750ktpa (testliner and recycled fluting) in H1 21e in Germany. PM 5 will replace their existing 3 machines.

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