• Pulp prices gain further traction, with European pulp prices up 7% w/w in EUR: NOREXECO pulp futures for CY 23E imply a 11-16% decline in Europe, and a decline of 12-20% in China. UTIPULP released May data: European pulp consumption was up 2% y/y (+6% m/m); Inventories -14% y/y (+1% m/m); and Inventory days -22% y/y (flat m/m).  
  • Graphic paper in the green led by newsprint (+2%) and UWF (+1%); however, pulp prices place further pressure on margins: After factoring in a 30% discount to list pulp prices, the CWF/HW spread decreased by 23% w/w to EUR 184/t, while the UWF/HW spread dropped 13% w/w to EUR 308/t. In the North America, Domtar, the largest UFS producer gas announced a 4-7% price increase from 1 September. In the US, AF&PA released the June 2022 Printing & Writing stats. Key read-though for Sappi was encouraging with CFS purchases up 2% y/y. Imports increased by 18% y/y and exports declined by 20% y/y. Inventories were down 2% m/m.
  • Testliner drops further by 2% w/w, while OCC keeps rising (+2% w/w): The kraftliner/testliner spread increased by 13% w/w to EUR 171/t, while the testliner/OCC spread declined by 3% w/w to EUR 563/t. Leipa set to increase testliner prices by EUR 60/t from 1 September in Germany due to rising energy and OCC prices. However, at the same time the company flagged downtime in July and August on the back of rising costs and a decline in demand. With this decision they are breaking new ground for the first time in their 175-year history by: permanently adjusting production capacities to actual demand; noticeably reducing the supply of unprofitable markets and counteracting the massive cost increases on the energy and raw materials side with targeted shutdowns. Smurfit Kappa has had to slow down production at its Facture containerboard mill in France due to major forest fires. The mill has a 585ktpa capacity of brown and white-top kraftliner. Germany’s Julius Schulte Trebsen to suspend RCCM production (250ktpa) next week for eight days. This is driven by high cost of production and insufficient order intake. They expect more stoppages to occur. DS Smith’s paper division in Europe to take additional downtime (20-30kt) between July and September due to significant input cost pressures.
  • ICC Dutch TTF Gas Futures drop from EUR 175/MWH last week to EUR 156/MWH: Russia has resumed Nord stream gas flow. Shipments returned to 40% of capacity, the level before flows were halted for 10 days of planned maintenance. In Germany, gas-storage facilities are at c.65% capacity, well short of the government’s 90% target. Russia has indicated that flows could fall to 20% as soon as next week as only two turbines at a compressor station (which feeds the pipeline) in Russia, are currently working. One of them needs to go for maintenance this month. Flows could drop unless a replacement component sent from Canada arrives in Russia soon.
  • US Packaging papers & specialties (includes kraft paper) stats: In the US, AF&PA released the June 2022 Packaging Papers & Specialties stats. Shipments decreased by 4% y/y and are now flat YTD. The operating rate reduced to 86.4% (-4.7pts y/y & YTD: +0.2pts y/y). Mill inventories were flat m/m and down by 9kt y/y. In North America, Domtar and Cascades have indicated they will start producing unbleached kraft paper instead of containerboard when their machines enter the market in Q4 22E. c.1.76mt of new containerboard capacity is entering the market this year still. WestRock has also communicated that they can swing >2mt between kraft paper (US market: 3-4mt) and containerboard (US market: 40mt).
  • Russian insights: Elopak divested 100% of its Russian business to local management. This was the best option after reviewing all possible options. Containerboard manufacturing in Ukraine decreased by 54% y/y to 137kt in H1 22A. Production of corrugated packaging declined by 42% y/y to 210 million m2. In 2021, 200kt of the 340kt of PfR imported by Ukraine came from Russia.
  • Mondi insights: Mondi has developed a new recyclable, lightweight packaging for Japanese consumer goods company Kao’s salon hair cosmetic brand Goldwell. Mondi has provided Protector Bags to help German bike manufacturer Diamant in replacing plastic wrapping for Trek and Diamant brands. Not new news, but more colour on Mondi’s EUR 65mn investment to expand its production capacity at three Consumer Flexible plants in Austria (Mondi Korneuburg) and Germany (Mondi Halle and Mondi Steinfeld).

Download Report