• Softwood producers keep September prices in China flat, while hardwood sees further cuts (USD 15/t): Arauco, Illim Group and Metsä Fibre announced flat prices into China for September orders. The Softwood Shanghai futures price for September has settled at USD 841.25/t. NOREXECO pulp futures for the Q4 20E contract imply a 11-12% decline in Europe vs. a 1-3% decline in China.
  • July global pulp producer inventories continue to increase, while shipment-to-capacity remained flat y/y at 82%): Stocks reached 44 days-of-supply (BSK: 42, up 2 days and BHK: 47, up 5 days). Global shipments declined by 8% m/m to 4.05mt but only -0.4% y/y. This decline was primarily driven by hardwood (-13% m/m & -1.7% y/y) as softwood was up 0.5% y/y (-2.6% m/m). Weakness in demand was seen across most geographies (China: -8.3% y/y & -5.3% m/m; North America: -4.5% y/y & -5.4% m/m), while Western Europe improved by 5.9% y/y (-9.1% m/m).  
  • Recap of pulp capacity entering the market in the next 12m: Bracell’s Project Star (2.8mtpa of kraft/DWP pulp) is expected to ramp-up from September (previously August), with the company assuring a “gradual ramp-up”. Arauco MAPA project (Chile): 1.56mtpa of BEK pulp in Q4 21E; UPM (Uruguay): 2.1mtpa H2 22E; Duratex/Lenzing JV (Brazil): 500ktpa of swing DWP in Q1 22E.
  • CWF margins flat, while UWF improves 6% w/w: CWF prices stable this week (+5.4% YTD), while UWF increased 1.3% w/w (+5.4% YTD). After factoring in a 30% discount to list pulp prices, the CWF/HW spread remains flat in the red at -EUR 16/t, while the UWF margin improved to EUR 167/t. APRIL has announced a USD 50/t price increase for UWF in Middle East and Africa citing “extreme difficulty and expense booking container space for the region”.
  • European containerboard prices in the green and OCC flat: In North America, the containerboard market remains heated with most prices up USD 50-60/t in August, taking the cumulative increase to USD 160/t, up 22% from October 2020. Despite US box shipments hitting a record high in 2020, current pace is expected to see a new record this year. YTD, box prices are up c.13%.
  • Folding boxboard (FBB) to increase further in Europe: Positive read-though for Sappi as Metsä Board is set to increase FBB by EUR 130/t from 1 November.

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