• Mixed pulp price moves this week: Pulp prices in China in the green after weeks of being under pressure. Surging BSK prices on the Shanghai Futures Exchange prompted Chinese buyers to stock up on NBSK imports, with an aim to arbitrage or hedge for quick gains, or to manage risk. Finally – NBSK prices erode in Europe (BEK prices stable), despite robust demand. NOREXECO pulp futures for Q1 21E imply a 4-8% decline in Europe, while prices in China are expected to increase by 3%.  
  • Graphic paper continues to make further gains: YTD, CWF and UWF prices are now up 21% and 16%, respectively. After factoring in a 30% discount to list pulp prices, the CWF/HW spread improves to EUR 57/t (UWF margin EUR 224/t). The Navigator Company intends to increase UWF prices by 10-15% from January. Additionally, the energy surcharge of EUR 50-100/t will still apply and will be revised monthly, and the price list will have a maximum validity of two months.
  • Containerboard back in the green and reaching new highs: European OCC prices continue to be stable. In contrast, the average pricing for US OCC has fallen for three months in a row. These decreases follow September’s high of USD 167/t (now USD 137/t), OCC’s fourth-highest US average in 30 years. The OCC pressure has been driven by continual shipping struggles meaning export volumes are now staying domestic; US mills are sitting on considerable stock (October 21 +6% y/y); increased OCC generation from retail and distribution centres as well as curb side recycling plants (+15-30% for some companies like Home Depot and Costco); and there is no further additional recycled containerboard capacity expected to start up in North America until Q2.

Peer News flow

  • IP to spend USD 40mn for new equipment to lift converting capacity at corrugated plants in France and Spain: The investment will enable IP to raise its converting capacity by 10% in the region, especially e-commerce (c.10% of the total corrugated packaging demand in the region). 
  • Smurfit Kappa Group has tapped Caddick Construction to build a 14,500 m² factory extension at its Mold packaging plant in Flintshire, North Wales: The order is part of a EUR 40mn) investment project announced last March by the company in order to expand production capacity at the site. The investment will make it the largest box factory in the UK and enable the plant to reduce its CO2 emissions by 15%/t. The construction of the new building is expected to be completed in summer 2022, with production ramping up until early 2023.

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