• Europe pulp prices rise further, while China prices in the red again: Despite European pulp prices rising further, producers had to settle for less than planned despite strong demand. Momentum could now be hampered by prices moderating in China. Softwood producers have been cutting prices to China by c. USD 50-70/t to spark interest following weakness in paper and board prices. Encouragingly, the BSK future (SHFE) increased by 3% last week (USD 834/t). This could yet again open up arbitrage opportunities. South American producers (Aracuo and Bracell) intend to cut hardwood prices to China by USD 100-105/t, while Suzano continues to negotiate with customers. In North America, US NBSK spot prices are 46% lower than list prices. Conversely, hardwood supply is tighter due to an improved P&W sector, despite slower demand from the tissue/towelling segment. ¬†NOREXECO pulp futures for the CY 22E contract imply a 14-16% decline in Europe vs. a 9-13% decline in China. ¬†
  • European graphic paper margins weaken further: After factoring in a 30% discount to list pulp prices, the CWF/HW spread is further in the red at -EUR 41/t (UWF margin -7% w/w to EUR 155/t). Burgo is set to increase CWF and CM reels and sheets by EUR 50/t (8-9%) effective 15 September. Sappi Europe has announced a minimum 10% increase for CWF, CM and UWF effective on all new orders or at the latest 1 October. In both instances, heavy cost rises for input materials and freight charges were noted.
  • European containerboard prices in the green: Saica to increase all brown and white containerboard grades in Iberia by EUR 45-60/t from 16 July and 1 August. In Russia, June pointed to the market stabilizing, at historically high levels (kraftliner: RUB 67k/t and testliner: RUB 60k/t). White-top kraftliner is playing catch-up having increased by RUB 2-4k/t in June and another RUB 4k/t expected in July.
  • Sack kraft paper market likely to remain robust into CY 22e: YTD, unbleached sack kraft price has increased by at least EUR 100/t. This has been on the back of tighter supply from outages, maintenance, increased exports to the Middle East and Asia) as well as swing machines favouring kraftliner production. Demand has been strong for bags used for cement and other building materials in Europe.

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