• Pulp prices to benefit from maintenance downtime in Q1: At least 10 Latin America pulp mills are scheduled for downtime in Q1. In Brazil, this will impact four mills with a total capacity of 1.8mt (BEK) and in Chile this will impact four mills with a total capacity of 1.7mtpa (BEK). Detailed maintenance schedules available.
  • Fibre shortage in China increasing tightness in global containerboard markets: There has been increased planned downtime for Chinese containerboard producers this year. This is ahead of the new year (12 February) but also due to lack of wastepaper. For example, Nine Dragons (ND) has at least two testliner mills down for a month from 7 February. China’s wastepaper ban has driven ND to announce three virgin pulp projects in the last 6 months.
  • China wastepaper ban seeing shift in capacity from China to Other Asia: Sun Paper has recently commissioned 1mtpa of recycled linerboard capacity in Laos. The output will be shipped to its 1.2mt recycled containerboard machines in China. Corrugated medium and recycled linerboard are now duty-free to China as China removed tariffs on 97% of Laotian goods from 1 December.
  • Mondi set to buy majority stake (90.38%) in Olmuksan International Paper for EUR 66m: On a 100% basis, the implied EV is EUR 88m (4% of H1 20A net debt). The deal makes sense for Mondi given its existing Turkish footprint (4 corrugated plants and 1 testliner paper mill and 3 flexible packaging sites). No guidance provided, but Mondi expects to generate “significant operational improvements and paper integration upside”. The deal is likely to close in H1 this year. Subsequent to this, Mondi will launch a mandatory tender offer to acquire the remaining 9.62% of outstanding shares. What does Mondi get? Olmuksan operates 5 corrugated plants (Adana: capacity 56mn m2/pa; Bursa: capacity 91mn m2/pa; Çorum: capacity 56 mn m2/pa and the Gebze and Izmir facilities: each with a capacity of 70mn m2/pa. For the year ended 30 September 2020, Olmuksan produced 256kt of corrugated packaging and generated revenue of EUR 150m (2.1% of MNP’s FY 19A revenue). We note that Olmuksan was loss making in its CY 19A and H1 20A. Historical financials from FY 05A available.  
  • Huhtamaki welcomes scientific evidence on the real environment impact of single-use packaging vs. reusable tableware: In a recently published comprehensive life cycle assessment by Ramboli. Paper-based single-use products provide significant key environmental advantages when compared to reusable tableware for in-store dining in Quick Service Restaurants. Advantages are primarily driven by the carbon emissions related to the amount of energy required to
    wash the tableware (polypropylene-based multi use system generated 2.7x more CO2-e emissions) and the amount of freshwater used in the washing process in a multi-use system (used 3.6x the amount of freshwater). 

Sappi newsflow

  • Sappi Maastrict set to sell the southwestern part of the mill to WOM.
  • Sappi provides its Guard Nature MS paper-based packaging solution (heat-sealable) for Tony’s Chocolonely new chocolate varieties. The sustainable alternative to multi-layer barrier films offers an integrated mineral oil barrier, which keeps the food within safe.
  • Sappi Europe to introduce new barrier coating technology for functional paper packaging at its speciality mill in Alfeld, Germany. Sappi expects to commission new products from mid CY 22e.

Mondi newsflow

  • Mondi wins eight awards in three categories at WorldStar Packaging awards 2021.
  • Mondi launches two new sustainable paper-based bags for German pet food producer Interquell. The pet food manufacturer asked Mondi to create two sizes of paper-based packaging bags with a functional plastic barrier for its sustainable premium Goood dog food.

Download Report