- Pulp prices steady but further prices increases on the cards: NOREXECO pulp futures for CY 23E imply a
13-20% decline in Europe, and a decline of 13-17% in China. In China, hardwood prices are set to increase further by c.USD 30/t (effective June) following price increases from Arauco, Illim Group and Suzano. This might have been opportunistic given Arauco again pushed back the start-up of its new 1.56mtpa BHK mill in Chile (MAPA project), from June to September. Arauco’s Valdivia BEK/DWP pulp mill (500ktpa), which was producing DWP was stopped due to a fire on 26 May. Suzano plans to increase BEK pulp in North America and Europe by USD 50-60/t effective 1 June. There is little supply relief underway in North American pulp markets, where producers lifted prices USD 60-80/t in regular contract business and shortages emerged in bleached hardwood kraft (BHK) spot markets in the wake of scheduled and unplanned downtime. China pulp imports were released for April 2022: Total imports declined by 7% y/y but increased by 8% m/m. YTD, total pulp imports are down 9% y/y. EUROPULP released April data for stocks of wood pulp at European ports: -10% y/y & -9% m/m. PPPC reported World-20 market pulp stats for April 2022: Global pulp producer stocks +1 days m/m to 42 days-of-supply (BSK: flat at 40 and BHK: +2 at 45). Shipments -0.7% y/y & -11.9% m/m to 4.120mt, well below pre-COVID levels (SW: -12.6% m/m & +5.5% y/y to 1.788mt; HW: +1.4% y/y & -10.9% y/y to 2.111mt). The shipment-to-capacity ratio dropped to 84% in (March 22: 91%), below April 21 (86%). - Graphic Paper prices take a breather: After factoring in a 30% discount to list pulp prices, the CWF/HW spread increases to EUR 274/t (UWF margin improves to EUR 383). EUROGRAPH released March data for total European shipments: CWF -5% y/y & +9% m/m; CM -19% y/y & +9% m/m; UWF -10% y/y & +11% m/m. AF&PA released CFS stats for April: Purchases +5% y/y; inventories +2% m/m; imports +16% y/y & exports -10% y/y.
- European kraftliner extends gains, up 1% w/w: The kraftliner/testliner spread increased by 7% w/w to
EUR 159/t. The testliner/OCC spread is stable at EUR 587/t. AF&PA released US containerboard stats for Q1 22A: Production +2% y/y; exports +9% y/y; and operating rate 94.0% (-0.4pts y/y). AF&PA released US boxboard stats for Q1 22A: Production +2% y/y (SBB: +2%); and operating rate 94.3% (+2pts y/y). - More kraft paper prices increases announced: In North America, Canfor Pulp is set to increase kraft paper prices by USD 66/t from 1 July. WestRock also announced a USD 75/t increase (applies to all global customers) on all its unbleached extensible kraft paper grades, effective 2 June. In Europe, some producers have announced price increases for the beginning of Q2 and others are announcing price increases for June/July, ranging between 8-17%.
- Russian insights: Russia accounts for 26% of the total sack kraft capacity in Europe, with some of the biggest integrated producers in the region located there. Russian paper accounts for 60% of all sack kraft imports and 12% of all sack kraft demand in the EU. This means that with the banning of paper from Russia, the EU sack kraft market will stop receiving c.77ktpa of sack kraft paper. SFT is set to take downtime in June amid falling containerboard demand. Essity has initiated steps to exit the Russian market. The move is due to the deteriorating business conditions in the country. Essity has three production facilities in Russia and c.1,300 employees. Sales in Russia accounted for 2% of total group sales in 2021.
- Mondi news flow: UWF production (capacity c. 270ktpa) at Mondi’s Merebank mill is still down after April flooding. Mondi held a ground-breaking ceremony for the expansion of its Kuopio semi-chemical (SC) fluting mill in Finland on May 9. The EUR125mn project includes an upgrade of the wood yard, fibre line, evaporation plant and PM, and will increase the mill’s capacity by 55ktpa (current capacity: 285kpta), with start-up expected in Q4 23E.
Download Report
