• North American coated free sheet (CFS) producers, including Sappi, target price increases of 2-5%:  In October, CFS No 3 60lb rolls were down 4% y/y and down 2% since February. At the end of October, Verso (2nd largest CFS producer: 800ktpa or 34% of market capacity) announced a USD 30/t or 2-4.5% price increase. On 10 November, Sappi (Largest CFS producer: 875ktpa pr 38% of market capacity) announced a 3.5-5% price increase for deliveries from January 2021. SAP’s price increase applies to all private label programs as well as all weights and finishes for: McCoy web, Opus web, Somerset web and Flo web papers. Price increases are on the back of a significant reduction in capacity (Verso and ND Paper), recovery in demand and supported by pulp prices.
  • Sappi Europe to increase fine paper prices for export markets: Sappi intends to increase export prices by 5-8% from Jan 2021. This compares to Suzano’s 15% increase for CWF effective November. Imported CWF sheets are now trading at c.USD 700-720/t (down 5% y/y).
  • APP to expand DWP and VSF capacity: APP has obtained environmental permits to build 500ktpa of DWP and 500ktpa of VSF in the Jiangsu province. The project is estimated to cost USD 1.8bn. The DWP line with use eucalyptus and acacia chips from Brazil and Indonesia from its parent group, Sinar Mas and partners in Vietnam. All the DWP will be consumed internally with no external sales.
  • Nordic Paper now listed (NPAPER), a sack kraft producer to track for Mondi read-through: Nordic Paper has four mills in Sweden and Norway with a combined capacity of 216ktpa of unbleached sack kraft paper, 92ktpa of natural greaseproof paper and 280ktpa of pulp.
  • Tightness in US kraftliner bodes well for European containerboard: After moving ahead with a USD 50/t domestic price increase (1st in more than two years), further price increases (up to USD 50/t) are being considered due to surging US domestic demand (Westrock’s recent results reinforce that domestic demand remains robust). Currently, it is taking 45-60 days for US exports to reach customers. Unbleached kraft linerboard exports YTD (September): China is up 79% to 576kt; Other Asia is up 15% to 422kt and Europe is up 12% to 532kt (Italy: +13%; Turkey: +60% and Spain: -5%).  
  • Hamburger’s new containerboard PM2 goes live in Spremberg, Germany: The EUR 370m investment, with two years of construction, increases the mill’s containerboard capacity by 500ktpa to 900ktpa and will produce white and brown grades. Hamburger is part of the Prinzhorn Group (family owned), with 3mtpa of containerboard capacity across Europe.
  • Ilim remains focussed on containerboard and with optionality to convert graphic paper assets: Ilim plans to build a new containerboard line at its Ust-llmsk mill in 2022 and ramp-up in 2023. The new PM capacity will be 600ktpa of kraftliner, making it the world’s largest kraftliner production capacity. The project will increase the company’s total board output to over 4.4mtpa. Ilim’s strategy remains focused on Asia, with the new capacity dedicated towards China.

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