• Further pressure on pulp prices in China: China hardwood declined by 3% w/w, while softwood dropped 5%. Currently, the spread between pulp prices in Europe and China is c. EUR 200/t, which is not sustainable. NOREXECO pulp futures for Q1 21E imply a 13-17% decline in Europe vs. a 2-3% decline in China.  
  • CWF and UWF prices stable: After factoring in a 30% discount to list pulp prices, the CWF/HW spread remains in the green at EUR 17/t (UWF margin EUR 186/t). UPM intends to increase announced price levels for 2022 by a further EUR 50/t due to higher energy, raw material and transport costs. This means their minimum CWF price will be EUR 790/t (spot: EUR 704/t). Norske Skog to increase prices for all deliveries by EUR 100/t for newsprint and CM due to higher energy prices. German paper traders such as Igepa, Antalis and Berberich Papier are seeking increases of up to EUR 150/t attributed to energy surcharges applied by paper manufacturers. In our view, the surcharges across the supply chain are likely to further increase the trend towards online communication.  
  • Containerboard and PfR prices stable: PfR remains stable, however, could perhaps see slight pressure in the next few weeks as exports to India were accidentally banned by the Indian government. This is likely to be resolved in the next 6-8 weeks.
  • FBB prices likely to gain further ground going into 2022 (positive for Sappi Europe): Some announcements were effective for October and November deliveries, but full increases will likely be seen in January, at which point annual contracts will have been renegotiated.

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