• Slight pressure on China pulp prices: China import pulp prices fell further this week (SW: -0.7% and HW: -0.4%). NOREXECO pulp futures for the CY Q4 21E contract imply an 8-10% decline in Europe vs. a 2% decline in China.  
  • European graphic paper margins improving but still under pressure: After factoring in a 30% discount to list pulp prices, the CWF/HW remains in the red at -EUR 9/t (UWF margin EUR 173/t). In Europe, further price increases are needed to address pressure from rising energy prices (Europe’s benchmark power price is up 150% y/y to EUR 100/MWh). Generally, purchased energy costs comprise c.10% of total variable costs for woodfree grades. Navigator North America is out with 6-9% price increase from 4 October and APRIL has announced a USD 50/t increase for UWF from 1 October due to a strong regional recovery (school reopening) in Asia and due to higher input and logistic costs.
  • Further SBS price increase on the cards (+ read-though for Sappi): WestRock intends to raise SBS prices by a further USD 50/t (5-8%) from 18 October.
  • + read-through from the US kraft paper market (West Rock, Premium 1 Papers & Georgia-Pacific comprise c.47% of unbleached and bleached capacity): Unbleached kraft paper grocery bag prices have increased by USD 10/t in August. Some converters are out with a 20% price increase from 20 September on the back of a shortage of kraft paper supply and demand partly fuelled by business restarts, substitution, and business rebranding. We note that August US unbleached packaging and specialty shipments increased by 12.3% y/y in August (YTD: +8.7%).

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