- Pulp prices stable but global shipment-to-capacity ratio of 83% points to further pressure: PPPC reported World-20 market pulp stats for October and global pulp producer stocks were flat m/m at 44 days-of-supply
(BSK: -2 days to 43 and BHK: +1 day to 46), while shipments down -6% y/y & -8% m/m to 4.246mt (SW: +1.9% m/m & -9.2% y/y; HW: -15.0% m/m & -4.9% y/y). The shipment-to-capacity ratio remains muted at 83%. Global pulp shipments were down m/m in all key regions: North America -9.1% m/m & -7.8% y/y; China: -7.2% m/m & -16.4% y/y; Europe: +11.4% m/m & -0.4% m/m. NOREXECO pulp futures for Q1 21E imply a 11-15% decline in Europe, while prices in China are now expected to increase slightly. - Graphic paper gains further ground across the board (UWF: +1%; CWF: +2% & CM +1%): After factoring in a 30% discount to list pulp prices, the CWF/HW spread is stable at EUR 46/t (UWF margin EUR 186/t).
EURO-GRAPH released September European demand stats this week. Total CWF shipments were up +20% y/y (+14% m/m), while CM increased by only 3% y/y (-5% m/m). UWF shipments were up 9% y/y (+3% m/m). In Asia, APRIL has announced a USD 50/t price increase for all UWF deliveries in January due to cost inflation coupled with Asian markets improving. - Containerboard reaches another record high: Europe testliner production YTD is up +9.9% y/y (+1.9mt) to 21.5mt. Testliner led gains again this week (+2%), reaching another new high of EUR 691/t. Most kraftliner producers have announced a price increase of EUR 50/t from next month. Despite paper availability improving in Europe and North America, International Paper’s Pratville kraftliner mill could tighten supply for the next two months. This mill represents 4% of North America capacity and is expected to be down for 1-2 months due to a stock tank failure. Global OCC prices have been taking a breather for now, but most planned global containerboard expansions will be based on recycled fibre. Accordingly, OCC demand and supply balance should remain tight in the MT-LT. According to RISI, US OCC demand is expected to increase by 6% in 2021 (2020: +4%) compared to 5% in Western Europe (2020: 3%).
- Unprecedent kraft paper price increases continue in North America (+ read-though for Mondi): With this month’s price increase, unbleached grocery bag paper prices are up 33% y/y; unbleached natural multiwall kraft paper for bags and sacks: +26% and bleached kraft paper for grocers, fast-food and other uses: +15%. Pricing has been driven by strong demand and tight supply as swing containerboard/kraft paper machines are still favouring containerboard.
- US producers target another SBS increase of USD 50/t in December (+ read-though for Sappi North America): Graphic Packaging and WestRock will raise all SBS prices by USD 50/t. Sappi will also raise its SBS prices by USD 50/t (5-6% depending on grade).
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