- Pulp prices steady: NOREXECO pulp futures for CY 23E imply a 12-19% decline in Europe, and a decline of 13-17% in China. UTIPULP released March data: European pulp consumption was down 2% y/y (+7% m/m); Inventories -19% y/y (flat m/m); and Inventory days -27% y/y (flat m/m). EUROPULP released March data for stocks of wood pulp at European ports: -20% y/y & -4% m/m. PPPC reported World-20 market pulp stats for March 2022: Global pulp producer stocks -3 days m/m (inventory decline of 382kt) to 41 days-of-supply with closing stocks at c.5.956mt (BSK: -5 day to 40 and BHK: flat at 41). Shipments -3.2% y/y & +13.1% m/m to 4.673mt (SW: -4.5% m/m & +13.2% y/y to 2.045mt; HW: -4.4% y/y & +10.4% y/y to 2.479mt). The shipment-to-capacity ratio reached 91% in February (February 22: 90%), well below March 21 (97%). North American market pulp conditions remain tight domestically with slim availability across key grades, and little relief from shipment delays. Preliminary May contract pulp prices increased by USD 50-80/t in softwood and hardwood kraft, in line with producer announcements as the industry braces for pockets of shortages during a time of maintenance downtime. In China, West Fraser (largest BCTMP producer globally) announced its May BCTMP pulp prices would increase by USD 20/t (effective immediately), to USD 750/t net CIF. China pulp prices have continued to increase due to limited availability of market pulp, even as Chinese mills slow production substantially to cope with contracting paper and board (P&B) demand stemming from the country’s ongoing lockdowns.
- CWF prices lead Graphic Paper gains: After factoring in a 30% discount to list pulp prices, the CWF/HW spread increases to EUR 262/t (UWF margin flat w/w: EUR 370). April brought the end of UWF paper production at VPK’s Alizay mill in France. The site, which used to produce some 300ktpa of copy paper, is currently being rebuilt to produce recycled containerboard.
- Containerboard steady: At the start of May, suppliers continued to report generally good order books and a relatively balanced market. According to most sources, the whole industry is still well booked, and demand is expected to improve in the coming weeks, with the high agricultural season in the south of Europe at hand. On the supply side, the ramp-up of Stora Enso’s Oulu machine, Mondi’s PM 19 at its Ružomberok mill, Klabin’s Puma II project in Brazil and Klingele Paper &Packaging Group’s Nova Campina mill in Brazil are expected to help compensate for the Russian import ban. In addition, US kraftliner exports to Europe, which have been limited for the last two years, have been on the rise again in Europe since February, as US domestic demand seems to have been cooling off lately. Q1 22A US kraftliner exports were up 12% to 990kt (Europe: +10% to 138kt).
- More price hikes on US boxboard: Major boxboard producers this week added to a new round of price increases in North America, now set for late-May to mid-June. WestRock on May 4 informed its customers it will increase prices by USD 50/t on its solid bleached sulfate (SBS) product lines, effective June 15. Sappi on May 13 announced USD 50/t (or 5-8% increases) on its folding boxboard (FBB) bleached packaging products effective June 13. The increases include Sappi’s Proto &Proto Litho, and Luster FSB and LusterPlate, and Spectro C1S and C2S grades.
- Russian insights: Stora Enso divests its three corrugated packaging plants in Russia. IP’s spinoff Sylvamo has decided to exit the Russian market and sell its business there. “There have been a significant number of non-binding offers from potential buyers already, and it is possible that a deal may close in Q2”. Sales in Q1 22A were up 25% y/y.
- Mondi news flow: Mondi has collaborated with German machine supplier beck packautomaten to create a functional paper solution that has the potential to revolutionise eCommerce by replacing plastic packaging and creating right-sized packaging for a wide range of products. The solution uses 95% paper and is recyclable across all European paper waste streams. Mondi’s Product Impact Assessment tool has been enhanced with new environmental KPIs to assess impacts of paper-based and plastic solutions. In addition to carbon and water scarcity, the tool now addresses key aspects in the sustainable design of products.
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