Pulp prices extend gains in China: Small and medium-size mills across China have begun to take downtime due to a shortage of pulp, and the stoppage is expected to continue until late February after the long Lunar New Year vacation. They are reluctant to buy market pulp at current levels, as the price is hard to justify given sluggish paper and board demand and weak pricing in the domestic market. c.70% of mills in Baoding (major tissue production hub in North China with a total capacity of 3mpta) have stopped operations. In North America, producers are out with a USD 50-65/t price increase for NBSK from 1 February. NOREXECO pulp futures for CY 22E imply a 9-14% decline in Europe, while prices in China are expected to decline by 1-5%. UTIPULP released November data: European pulp consumption +2.4% y/y & -6.2% m/m; Inventories -14.8% y/y & +1.2% m/m; and Inventory days -20% y/y & flat m/m. EUROPULP released December data: Stocks of wood pulp at European ports -14% y/y & -4% m/m.
Graphic Paper in the green except for UWF: Newsprint was up a staggering 10% w/w reaching record highs on the back of tight supply and rising gas prices. Coated paper grades were up 3%. In contrast, UWF dropped 3% w/w. After factoring in a 30% discount to list pulp prices, the CWF/HW spread improves to EUR 120/t (UWF margin EUR 314t). In Europe, Lecta has announced a 12% price increase from 1 February on its CWF and UWF grades due to continued cost pressure from energy and chemicals. EUROGRAPH released November data for total European shipments this week: CWF +14% y/y & -1% m/m; CM +3% y/y & +1% m/m; UWF +7% y/y & +6% m/m. In North America, UFS producers are out with further price increases of 6-9% from February (2021 US UFS volumes shipped were 0.7% lower y/y to 5.04mt – but down 20% when compared to 2019). AF&PA released CFS stats for December: Purchases +3% y/y; inventories +4% m/m; imports +62% y/y & exports -1% y/y.
White-top kraftliner up 1% w/w, while other containerboard grades are stable: Meanwhile, in North America, containerboard producers are targeting further price increases. International Paper announced a USD 70/t price increase on its linerboard, corrugating medium, and kraft bag paper, effective with Mar.1 shipments. US containerboard production reached a record 40.07mt in 2021, up 5.6% y/y (+2.1mt vs. a 1.8mt increase in capacity). This compares to capacity of 42.2mt in 2021, with an implied operating rate of 94.9% (2020: 94.0%).
