- Pulp prices rise further: NOREXECO pulp futures for CY 23E imply a 15-20% decline in Europe, and a decline of 12-20% in China. US pulp prices post 6th straight monthly gain, rising by USD 40-100/t as BHK surge outpaces BSK.
- Graphic Paper prices stable but margins temper slightly as pulp prices rise further: After factoring in a 30% discount to list pulp prices, the CWF/HW spread decreases by 9% w/w to EUR 245/t (UWF margin reduces by 5% w/w to EUR 349/t). In the US, AF&PA released the May 2022 Printing & Writing stats. Key read-though for Sappi was encouraging with CFS purchases up 2% y/y, while imports decreased by 6% y/y and exports declined by 5% y/y. Inventories were up 2% m/m.
- Containerboard prices stable, while OCC extends gains, up 2% w/w: The kraftliner/testliner spread dips slightly to EUR 159/t. The testliner/OCC spread is stable at EUR 581/t. In the US, OCC prices ended its 8-month pricing decline, with prices holding steady now.
- US sack kraft stats: In the US, AF&PA released the May 2022 Packaging Papers & Specialties stats. Shipments increased by 1% y/y and are now up 1% YTD. The operating rate improved to 88.0% (+0.2pts y/y & YTD: +1.1pts y/y). Mill inventories declined by 2kt m/m and by 8kt y/y.
- US boxboard prices increase by USD 50/t in June: This has been driven by continued tight supply and elevated costs. SBS is now up USD 450/t in 2022 (positive for Sappi).
- Russian read-through: Ilim Group’s new Kraft Linerboard Mill in Ust-Ilimsk is set to start up in late 2022. The KLB Mill will become the largest kraftliner production site in Russia and make the Ilim Group one of the world’s leading manufacturers of unbleached packaging materials. Beer brewers and some other beverage producers in Russia have decided to change design plans for their bottled beverages in the face of label paper shortages and rising prices for production costs such as ink and printing. Firms opting to drop labels for bottle necks due to sanctions include the Russian branch of AB InBev. Russian dairy industry association seeks ways to tackle packaging supply chain issues.
- Peer news flow: The Mayr-Melnhof Group expects Q2 22E EBIT in the range of EUR 150-200mn, up 384-545% y/y and 35-80% q/q. DS Smith reported FY 22A results this morning. Revenue +21% y/y; adjusted EBIT +23% y/y and DPS +24% y/y. Balance sheet continues to strengthen with net debt/EBITDA of 1.6x and a 260bps ROACE improvement to 10.8%. Management appears bullish for the year ahead, expecting a “substantial” improvement in performance, supported by volume growth of 2-4%.
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