- Poland experiencing wave of new corrugated packaging capacity: This is on the back of significant growth in corrugated demand in Poland, with growth rates of 5-6% p.a., implying at least one new corrugator is required to start-up each year. Corrugated demand has been underpinned by e-commerce and FMCG. At the beginning of 2020, 5.6% of Polish retail was online, and shot up to 11.6% in April 2020 but has pulled back to 7% as restrictions have eased. Poland offers low production costs as well as significant export opportunities of packaged goods as well as corrugated packaging. Notably, DS Smith is investing in a 37,000m2 greenfield production plant with an expected start-up in Q1 22E. Smurfit Kappa Group is investing EUR 25mn to upgrades its corrugated packaging plant in Warsaw.
- Smurfit Kappa increasing its presence in Eastern Europe: SKG will be investing EUR 20mn to expand its converting capacity at four manufacturing plants across Czech Republic (3) and Slovakia (1). All four projects are expected to be completed in 2021 and will increase capacity by >100mn regular and offset printed boxes p.a.
- Stora Enso inaugurates its renewed containerboard mill in Oulu (Finland): The EUR 350mn conversion is now ramping up ahead of plan and is expected to reach its annual production capacity of 450ktpa of kraftliner by the end of June 2021.
- BillerudKorsnäs and Haver & Bocker jointly develop further sack pack norms (a total of nine sack packaging norms): These cover the basics & some of the most critical factors that need to be considered when powdered goods are packed.
- Q1 21A US box shipments up 3.9% (FBA), Q2 21E could reach 7% (RISI): Containerboard supply shortage in the US is expected to persist further. Domestic containerboard prices are up 15% in six months and box shipments are taking on average twice the time to be delivered, compared to two years ago.
- More M&A in North America this week, Graphic Packaging (GPK) acquires AR Packaging (Europe’s 2nd largest folding caron converter): With a cash price of USD 1.4bn, this implies a 9.1x EBITDA pre-synergies (<7.5x post). The deal means GPK will remain heavily geared until at least FY 23E. AR Packaging is mainly focused on food and consumer end uses with 25 converting facilities across Eastern & Western Europe.
- North American pulp and paper industry Q1 21A margin hits 8% (earnings excl. special items/sales), highest Q1 in the past ten years: This was mainly driven by Canfor, Resolute Forest Products, Rayonier Advanced Materials, Schweitzer and West Fraser Timber recording double digit revenue growth on the back of robust demand for lumber and wood products.
- Albeit small, further UWF closures confirmed: Russia’s Arkhangelsk Pulp and Paper to close two UWF paper machines at the end of September due to poor profitability. This means 60ktpa will exit the UWF market.
- UPM Specialty Papers introduces advanced fibre-based packing solution, UPM Asendo Pro: This product introduces an advanced fibre-based barrier paper. It is two-side coated paper that provides multiples advantages as an easily recyclable monomaterial. In addition to advance grease resistance and good moisture resistance, its mineral oil barrier properties keep products safe. Accordingly, the product is suitable for dry, greasy and frozen foods as well as wrappings where excellent print properties are vital.
Mondi newsflow
- Mondi has resumed production on its 300ktpa kraft-top white linerboard PM 19 at Ružomberok mill (Slovakia) following an incident last week. The machine is producing two kraft-top white grades – ProVantage Smartwhite and ProVantage Topwhite. The main difference is appearance: Smartwhite is the top product, it has a top layer with a perfectly white surface, whereas the Topwhite grade has a higher share of recycled fiber. This new product different from other white liners is the combination of a top layer made of hardwood virgin fiber and a bottom layer made of recycled fiber.
- Mondi’s Syktyvkar mill in Russia is taking three weeks of maintenance downtime from 23 May.