• Pulp prices firmly in the green again this week: The worlds’ largest BCMT pulp producer, West Fraser has increased the BCTMP price to USD 650/t in China with immediate effect. The NOREXECO pulp futures for 23E imply an 9-14% decline in Europe, while prices in China are expected to decline by 6-8%. Supply-side disruptions, logistics bottlenecks and climbing resale prices have resulted from shortages in customers’ stocks in China and have driven up levels for pulp imports across the board. Arauco has postponed the start of its MAPA 1.56mtpa BEK pulp project to the end of April 2022 (originally planned for Q2 21, then the end of 2021, then March 2022). As part of the MAPA project, the company shut down its BEK pulp Line No1 (290ktpa) on 3 January in accordance with the environmental permit. Arauco updated its estimate for the final investment of the project and is now expecting it to be c.USD 2.8bn (originally USD 2.35bn).
  • Graphic Paper in the green again this week: After factoring in a 30% discount to list pulp prices, the CWF/HW spread is flat at EUR 195/t (UWF margin: EUR 289).  
  • Containerboard prices stable, except for white-top kraftliner, up 1% w/w: OCC prices jumped 2% w/w. Despite good stocks at mills in February, OCC prices are gaining traction again due to low collection volumes, healthy domestic demand and rising exports. In the US, pricing for most recovered paper increased in March as both domestic and export mill demand outpaced supplies. With US OCC at USD 128/t in March, this is 60% higher y/y. North America’s largest containerboard producers this week began implementing a fourth linerboard price increase in 17 months. PCA pointed out that its Q1 22A box shipments were higher y/y (also the case in 2021, when PCA reported that its box shipments were higher % wise than the industry total every month). IP expects 1-2% US box demand growth p.a. in 2023 and 2024, while 2022 shipments “may be elevated.”
  • Russian insights: Russian virgin containerboard prices were stable in February (historically high levels for the 10th month in a row), while RCCM prices were up 5% due to good demand. RCCM producers are already starting to experience problems completing maintenance work due to difficulties getting the required equipment. Russia’s APPM stopped bleached kraft pulp production and will transition to unbleached due to a lack of chemicals (chemical producer Kemira stopped deliveries to Russia and Belarus as of March 1). APPM’s containerboard production is operating normally, with no changes currently planned. APPM can produce just under 1mtpa of bleached hardwood and softwood kraft pulp.
  • High energy prices start to impact supply: Pro-Gest has declared force majeure and decided to temporarily stop production of all 9 of its corrugator and tissue paper machines as the price of natural gas is now >10x than twelve months ago. Their packaging plants are not impacted currently and will remain in regular production for the time being.

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