- Pulp, Paper and Packaging all close 2021 in the green: NBSK Europe +43%; BHKP Europe +68%, China NBSK +13%; China BHKP +14%; CWF and CM +21%; UWF +20%; Kraftliner +49%; Testliner +63% and OCC +81%.
- Q4 average moves (y/y & q/q): NBSK Europe +58% & +1%; BHKP Europe +74% & +3%, China NBSK +20% & -12% q/q; China BHKP +22% & -13%; CWF +15% & +11%; CM +11% & +11%; UWF +11% & +7%; Kraftliner +46% & +11%; Testliner +68% & +12% and OCC +117% & +6%.
- Pulp prices broadly stable this week but some green shoots in China: European pulp demand remains good, as seen with the absorption of volumes diverted from China when prices came under pressure. November Europulp stats point to a 21% y/y reduction (+2% m/m) in woodpulp stocks at European ports. In Q1 22E, pulp supply is likely to tighten due to continuing logistical issues and planned maintenance at Latin America mills (c.250kt of BEK pulp to be removed). NOREXECO pulp futures for CY 22E imply a 12-19% decline in Europe, while prices in China are expected to be stable.
- Good start to the year for Graphic paper: CWF and newsprint are up 2% w/w, while UWF and CM are up 5% and 6%, respectively. After factoring in a 30% discount to list pulp prices, the CWF/HW spread improves to EUR 74/t (UWF margin EUR 315/t). Paper producers continue to adjust sales prices to compensate for higher energy costs. Kabel and Norske Skog are set to implement a EUR 200/t & EUR 125/t energy surcharge for CM deliveries from 10 January. With strikes impacting UPM Finland (only set to end on 5 February), this is likely to support further price increases. Meanwhile, Sappi Europe intends to increase prices by 10-25% (grade dependent) effective February. In the US, Verso has announced an 8% price increase (USD 60/t) for its CFS from 1 February. This is already after the CFS benchmark having increased by 8% q/q in Q4 21A.
- Containerboard (yet again) reaches new highs: Anecdotally, German mills did not take much downtime in December due to strong containerboard demand. Kraftliner and white-top kraftliner both increased by 1% w/w. Testliner was stable, while European OCC was down 1%. OCC prices have been broadly stable to slightly down in December as collection volumes have improved, coupled with increasing inventories and lower exports. In Russia, the government continues to encourage price stability and accordingly it’s expected that no further increases for the kraftliner and semi-chemical fluting grades will happen this winter in Russia. White-top kraftliner; however, is expected to increase by c.5% in January.
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