• Mondi completes acquisition of Olmuksan from IP for EUR 66mn: This follows on from the announcement on 5 January 2021 of MNP’s intention to acquire 90.8% of the company, with an EV of EUR 88mn on a 100% basis. MNP will now launch a mandatory tender offer to acquire the remaining 9.62% of outstanding shares. Recap: The deal compliments MNP’s existing Turkish footprint (4 corrugated plants & 1 testliner paper mill & 3 flexible packaging sites). For the year ended 30 September 2020, Olmuksan produced 256kt of corrugated packaging (5 corrugated plants) and generated revenue of EUR 150mn (2.3% of MNP’s FY 20A revenue). Olmuksan was loss making in its CY 19A and H1 20A but MNP expects to generate “significant operational improvements and paper integration upside”.    
  • Progroup to increase corrugated packaging capacity by 50% in the next four years: This will involve four new greenfield corrugated sheet-feeding plants at a cost of c. EUR 300mn across Poland, Germany, Italy and France.
  • Smurfit Kappa Group (SKG) set to increase presence in Russia: SKG plants to spend USD 13.6mn to increase corrugated board capacity by 18% to 260mn m2 p.a., with work expected to start this year and to be completed by 2025. This will involve the installation of an additional production line at Kommunar & Vsevolozhsk plants.
  • SKG spending EUR 11.5mn to reduce group carbon emissions by 2%: SKG will invest in a fuel conversion project (major redesign of the multi-fuel boiler) at its paper mill (500kpta) in Zülpich, Germany and is expected to be operational mid 22E. This will reduce carbon emissions at the mill by 21%, saving 55kpta in carbon emissions. SKG remains comfortable that they are on track to meet the EU target of -55% CO2 emissions by 2030.
  • Sappi (SAP) starts production of label papers at Gratkorn (Austria): With this optionality, SAP can maximise operating rates, requiring no CapEx. Products are for wet-glue labelling and self-adhesive labelling. SAP currently produces labels at: Alfeld, Carmignano and Somerset. SAP will also be able to expand its portfolio of label papers at Gratkorn. In June, SAP will launch “Parade Label Pro” for the self-adhesive industry.
  • Further clarity around Bracell’s (part of the RGE Group, parent of APRIL) Project Star:  Brazil authorities confirm a maximum of 3mtpa of kraft pulp, but start-up unknown. Bracell acquired Lwarcel in 2018, but never confirmed that it was building tow new lines, running side by side in addition to the existing 250ktpa BEK line. The 3mtpa is much higher than the guided 1.25mtpa of swing capacity guided to start-up in H2 21e. Ramp-up remains uncertain considering the mill having lost FSC certification (as RGE owns the entire group).
  • US coated free sheet (Sappi read-though) purchases decreased by 17% y/y in April: Market conditions continue to improve.  Encouragingly, imports declined by 21% y/y, while exports increased by 14%.
  • US uncoated free sheet (Mondi read-though) shipments up 13% y/y in April:  Following much needed capacity rationalization in the US, all metrics for US UFS were encouraging in April. Imports declined by 21% y/y (negative for European producers), and exports increased by 14% y/y.
  • US Packaging papers and specialties printed a 4% increase for April shipments (YTD +1% y/y): Operating rates climbed to 95.1% in April, up 520 bps y/y. This is positive read-through for Sappi (C1S, Bristols and release).

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