- Key insights from the 2021 Klabin Investor Day: Klabin believes that the solid economic performance in Europe and North America will continue to boost kraftliner demand in 2022 and expects kraftliner prices to hold. Most of the paper packaging market continues to benefit from plastic substitution and e-commerce growth. Klabin project that plastic substitution could add 3mt to the expected growth of boxboard demand by 2030. Klabin are starting to see the Chinese pulp market become robust from a demand point of view. With the improvement in Chinese pulp demand, this will narrow the gap for pulp prices in the region compared with those in Europe. Pulp demand in Europe remains very strong, with clients in segments such as packaging, specialties and tissue performing above their expectations.
- Pulp prices steady but further price increases confirmed for Asia: Following Suzano and CMPC, Klabin and Eldorado set a USD 20/t price increase for BEK pulp in Asia, effectively immediately, noting restocking activity especially in China. NOREXECO pulp futures for Q1 21E imply a 10-12% decline in Europe, while prices in China are expected to increase by 3-5%. The price differentiation between the Chinese and European regions continues due to the logistics crisis. Prior to the pandemic, any corrections in the price spread between these regions used to lag by c.45 days.
- Graphic paper continues to make further gains: YTD, CWF and UWF prices are now up 21% and 14%, respectively. After factoring in a 30% discount to list pulp prices, the CWF/HW spread improves to EUR 60/t (UWF margin EUR 208/t).
- Containerboard flat w/w and OCC slightly down: Hamburger Containerboard to increase prices for its coated white corrugated papers by EUR 50/t, effective January 1. Saica to lift prices for white containerboard (EUR 50-70/t) and kraftliner substitute (EUR 50/t) grades in Iberia from December 16. In North America, IP confirmed that box demand is still strong, while cost, supply-chain pressures seem to worsen. US box shipments are on track to grow by 6% in 2020 and 2021, the highest two-year growth since 1993-1994. IP also noted that their natural gas and wood chip costs were higher today than expectations at the end of October.
- Further SBS price increases announced: Clearwater Paper adds to the string of December price increases announced. They intend to increase SBS prices by 4-6%. SBS prices in the US are now up c. USD 250/t (+18-24%).
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