Fastmarkets RISI Global Paper Packaging Outlook

  • Pulp prices in the green, with China hardwood pulp leading gains: Suzano expects global pulp supply to remain constrained in Q1 22E, with low inventories across the board and scheduled and unexpected stoppages at mills that combined can curtail c.1mt of pulp during the period. Suzano’s own pulp inventories are “below optimum operational levels” and pulp demand in China is “healthy” as paper production has been improving since December (paper and board inventories are lower y/y) and after the Chinese New Year, the industry should meet the high season demand. New capacity starting up this year includes Arauco’s 1.56mtpa MAPA project expected for March. In Europe, Södra and SCA are raising NBSK prices by EUR 50/t for all February deliveries. In North America, Domtar is set to increase both softwood and hardwood grades by USD 70-110/t from 1 March. NOREXECO pulp futures for 23E imply a 11-15% decline in Europe, while prices in China are expected to decline by 5-6%.
  • Graphic Paper in the green, with newsprint leading gains (+7%): After factoring in a 30% discount to list pulp prices, the CWF/HW spread improves to EUR 184/t (UWF margin EUR 321). The Navigator Company is set to increase UWF prices in Europe by 8-15% from March 1.
  • European containerboard prices remain steady, but further price increases announced: DS Smith to increase testliner prices by EUR 50/t in Europe (with immediate effect) due to strong demand and high input costs. In North America, following numerous containerboard price increases announced (USD 70/t from 1 March), IP (largest NA containerboard producer and corrugated converter: 32%) and WestRock (2nd largest: 22%) have announced a 14-16% corrugated price increase from March.
  • European sack kraft exports dropped 99% (from 885kt to 4kt) in 2021: Demand was strong in 2021, driving record domestic demand in Europe. This included cement production, construction, and rapid activation of consumption, coupled with an uptick from e-commerce (double digit growth since the pandemic started). Additionally, single-use plastics policies in Europe will be another positive driver for kraft paper demand as consumers shift from lightweight plastic carriers to kraft paper bags.  

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