• Pulp prices in China continue to benefit from the futures market: January tonnage was c.126mt (c.2x the highest monthly volume recorded previously). Fundamentally, demand has been strong in China on the back of robust tissue and ivory board consumption. Additionally, a weaker USD has supported pulp prices. We caution however, that the pace of price increases resembles the market in H2 17A.   
  • Non-integrated Graphic Paper producers are battling: Using HW pulp as proxy for non-integrated Graphic Paper producers, the CWF/pulp spread turned negative this week (was last negative in August 2019), while the UWF spread is down 19% w/w.
  • OCC prices up 5% w/w to EUR 123/t (+264% y/y): Key drivers include high domestic demand, lower collection volumes due to lockdown measures and good export opportunities. Additionally, increasing freight rates and insufficient container availability in some parts of Europe has hampered supply.
  • Unbleached sack kraft paper prices starting to move in Europe: Producers are targeting a price increase of EUR 50/t on the back of improved demand. Demand unexpectedly picked up towards the end of 2020, primarily from export markets. Supply has also tightened, with swing machines (between linerboard and kraft paper) focussing on linerboard due to a robust containerboard market. Additionally, Segezha’s mill in Karelia (Russia) has had a longer than expected maintenance shut ahead of its upcoming modernization program (rebuild from March-June).   

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