• Conference call on Thursday: Ahead of the FY 20A conference call on 28 January at 7pm, we note key uncoated woodfree (UWF) insights relevant for Mondi’s paper business.
  • Navigator operated at full capacity from July onwards:  This compares to its competitors, which were at 68% of capacity in Q3 and gradually moved up to 80% in Q4. Q4 paper sales were up 2% q/q but down 6% y/y. FY 20A paper volumes were down 12% y/y to 1.276mt – this compares to industry data, where Europe was down 12% and the US was down 19%.
  • UWF outperforms other grades: Global UWF demand was down 8% y/y in Q4 (October and November), while CWF was down 9% and CM was down 18%.
  • Differing geographical trends, with demand uneven in Q4: Europe was down 7% (Q3: -10%) vs. -13% in the US (Q3: -19%). Their sheeted business recorded the largest drop in consumption, whilst reels business was more resilient.
  • Price inflation coming back: In Q4 20A, Navigator implemented a price increases in international markets of more than USD 40/t, in USD denominated sales (EUR denominated sales in international markets evolved even more positively).
  • UWF outlook is encouraging: Higher pulp prices globally for HW and SW should support rising paper prices. Navigator has announced a price increase of 4-6% in in Europe for February 2021. Additionally, UWF manufacturers started 2021 with order books at comfortable levels (c.30 days at the end of December for Navigator and 28 days for its European competitors), in line with previous years. Paper stocks in the distribution chain are relatively low and incoming orders in January compare favourably y/y. We also note that higher maritime freights should in the ST deter imports into Europe by the major exporting countries (Indonesia, US, Canada and Brazil). Furthermore, closures between 2019 and 2021 in the US and Asia should help improve supply/demand dynamics.

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