• Good news for Sappi, Verso halts efforts to find buyer for its idled Wisconsin Rapids mill: We have previously flagged this as a catalyst for SAP’s North American segment. If the mill closes, this would leave Sappi as the only domestic CFS sheets producer, potentially allowing SAP’s North American graphic paper volumes to recover to pre-COVID levels.
  • Segezha (3rd largest kraft paper producer globally vs. Mondi’s # 1 position) to produce first bleached sack kraft paper in Russia: The company in planning to ramp-up production at the beginning of 2021, with all production to be internally used. Capacity has not been disclosed but based on the equipment to be supplied by Andritz, the line will be able to process c.128ktpa of bleached pulp. The mill currently produces 380ktpa of unbleached sack kraft paper.
  • Growing list of pulp projects in South America: Bracell’s project Star (part of the RGE Group), which is currently under construction in São Paulo was originally planned to add 1.25mpta of BEK/DWP capacity. The recovery boiler will be sufficient for production of > 2.8mtpa of BEK pulp. The initial capacity of 1.25mtpa of DP/BEK is scheduled to start-up in Q4 21e and planning to produce up to 2.2mtpa of pulp by CY 26e. Other noticeable potential pulp projects include: Euca Energy’s (2mtpa BEK pulp: granted environmental licence but no schedule); Paracel (Paraguay) are aiming to secure funding for their 1.5mtpa BEK project; Eldorado could proceed with its plans for a second brownfield line (2.5mpta) in Brazil once shareholders’ dispute is potentially resolved in November; and Suzano also has a 2.2mtpa licence approved.   
  • China issued 13th batch of recovered paper (RCP) import permits last week: Total of 95kt takes total import quotas for 2020 to 6.75mtpa. We note that Indonesia has postponed the implementation of new regulations for RCP imports (from 1 October to 1 January 2021) and Vietnam is expected to set the ban on imported mixed paper at the end of 2021.
  • Recycled pulp, helping to narrow the China fibre gap. Greenlight for Zhejiang recycled pulp project: Approval was received for the 800ktpa recycled OCC pulp mill in Malaysia with an expected project cost of USD 192m and to be commissioned by the end of CY 21e. Output will be sent to China to feed the company’s board machines (BMs). Recycled pulp prices are currently USD 370-380/t delivered to China’s main ports, compared to USD 280-340/t in January.   
  • Increasing wood pulp capacity, an avenue for China producers to respond to the RCP import ban: In-house wood pulp capacity is used to help ensure quality of board produced and reduce production costs from the fibre shortage due to the RCP total ban. According to ND, domestic wood fibre quality has been unsatisfactory, thus impacting operating efficiencies of the BMs and hindering wastewater treatment. Nine Dragons (largest producer in Asia: 5.6mpa of recycled packaging board) announced their third project aimed at increasing wood pulp capacity in China. ND is planning to build 400ktpa wood pulp capacity in China (2 unbleached CTMP lines). The output will be used to partially replace recycled fibre and help furnish 3 BMs at the mill (1.05mtpa of recycled linerboard and 550kpta of coated duplex board). The first project was a greenfield 600ktpa in China; and the second was a 600ktpa brownfield project at its Shenyang mill helping to feed two recycled containerboard machines (950ktpa).  

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