• Pulp prices steady, April European pulp consumption down 1% y/y, while European pulp stocks were down 10% y/y and global pulp shipments in May were up 5% y/y: NOREXECO pulp futures for CY 23E imply a 13-17% decline in Europe, and a decline of 12-20% in China. Last week, Suzano announced new price increases for BHK globally – USD 20/t for China and other Asian markets, USD 30/t for Europe, and USD 40/t for North America. Supply shock expected in Asia, where the 2.5mpta Asia Pulp & Paper Sinar Mas OKI mill in Indonesia is expected to reduce production after a shipping vessel destroyed its pier (could take 5-6 months to repair). The UPM Paso de los Toros pulp mill (Q1 23E start-up expected) was recently granted approval by the Uruguayan environmental authorities for its commissioning plan enabling UPM to begin the testing phase for pulp production equipment at the new plant. Arauco has signed term of agreement to build new 2.5mpta pulp mill in Brazil. The USD 3bn Sucuriú Project is still subject to the evaluation of wood supply in the region. If these conditions are met, the unit to be built would be Arauco’s first pulp plant in Brazil and expected to start operating in 2028. Construction works are expected to start in 2025 after environmental licensing has been granted. UTIPULP released April data: European pulp consumption was down 1% y/y (-7% m/m); Inventories -18% y/y (-7% m/m); and Inventory days -25% y/y (-10% m/m). 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 May 2022: Global pulp producer stocks were flat m/m at 42 days-of-supply (BSK: -2 to 38 and BHK: +1 to 456). Shipments +5% y/y & +6% m/m to 4.378mt, the highest level in >12m (SW: +6% m/m & +8% y/y to 1.933mt; HW: +7% y/y & +7% y/y to 2.256mt). The shipment-to-capacity ratio improved to 86% in (April 22: 84%), higher than May 21 (86%).
  • Graphic Paper prices stable but more CFS increases expected in the US: After factoring in a 30% discount to list pulp prices, the CWF/HW spread increased by 1% w/w to EUR 248/t (UWF/HW spread +2% w/w to EUR 355/t). Coated freesheet (CFS) paper rolls remained flat in June over May, but some CFS sheets grades increased. Billerud raised its CFS sheets and web rolls prices by up to 8% in May and sheets prices by a further 10% in June, while Sappi increased sheets by up to 15% and web rolls by 8% effective May 16. EUROGRAPH released April data for total European shipments: CWF -2% y/y & -14% m/m (Europe deliveries +7% y/y & -15% m/m and exports -27% y/y & -9% m/m); CM -28% y/y & -16% m/m; UWF -17% y/y & -16% m/m (Europe deliveries -12% y/y & -16% m/m and exports -40% y/y & -18% m/m).
  • Containerboard prices stable, while OCC extends gains, up 1% w/w: Kraftliner/testliner spread down 2% w/w to EUR 155/t. The testliner/OCC spread is stable at EUR 583/t. Hamburger Containerboard have expressed concern about the current development of production costs for testliner. “In the event of further margin erosion, shutdown measures cannot be ruled out”.
  • Mondi news flow: Mondi’s Merebank mill (KZN) in SA restarts after April flooding. Production remains limited for now. Full power supply to the mill was restored in mid-June and the start-up of the utility plant and paper machine has been successful. The mill has capacity of 270ktpa of UWF paper. Mondi has partnered with the National Test Centre Circular Plastics (NTCP) in Netherlands to prove effective sorting of its plastic packaging during recycling process. Real-life scenarios were created to prove Mondi’s mono polypropylene pouches and reel material are designed for recycling, can be identified during the recycling process, and sent to the correct recycling stream. Mondi introduces Grow&Go. Grow&Go is a suite of packaging products optimised for farm-to-shelf delivery in a market-leading range of sizes, from attractive consumer-friendly trays and carry packs to pallet-ready bulk shipping boxes.

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