- Pulp prices stable, for now: NOREXECO pulp futures for CY 23E imply a 12-18% decline in Europe, and a decline of 11-20% in China. Ence’s 515ktpa BEK mill in Pontevedra, which had to suspend operations in late July due to drought conditions cannot be restarted until the water flow in the Lérez River returns to legally mandated levels. Despite no price increase announcements for China pulp prices in August, there are now signs that prices for pulp imports have begun to fall in China and other Asian markets. Arauco cut the list price for unbleached softwood kraft (USK) pulp by USD 40/t to USD 870/t at the end of July in China. Several producers have cut prices for BCTMP by up to USD 30/t. Interesting insights from the Fastmarkets recent Forest Products Conference in Brazil. The lack of wood could become a limitation for future pulp expansion projects in Latin America. There are still many areas in Brazil to implement new eucalyptus plantations, but it has been harder to source wood from mature forests that are ready for harvesting. “Suzano noted that “We do not have availability of wood for competitive projects in the ST.” According to the latest figures from the Brazilian Trade Secretary, Brazilian BEK exports increased by 15.8% in the first six months of 2022 to 8.8mt (exports to China were up 11.3% to 3.6mt).
- Graphic paper in the green except for CM: After factoring in a 30% discount to list pulp prices, the CWF/HW spread increased by 7% w/w to EUR 206/t, while the UWF/HW spread increased by 5% w/w to EUR 330/t. Despite CM demand coming under pressure, there is another energy surcharge for SC paper in August. In the US, AF&PA released the July 2022 Printing & Writing stats. Key read-though for Sappi was encouraging with CFS purchases up 2% y/y. Imports increased by 32% y/y and exports increased by 6% y/y. Inventories were down 1% m/m. Sappi Europe announced an 8-10% price increase woodfree paper from 12 September. Sappi noted that “The cost outlook remains uncertain, and Sappi will continue to adjust pricing if costs escalate further”. Lecta set to increase prices by 8-10% for UWF and two-side coated woodfree products by 8-10% from 1 September. Mayr-Melnhof will take downtime at its Kwidzyn mill (410ktpa of UWF) in Poland due to unpredictable wood supply.
- Kraftliner (-1% w/w) plays catch-up to testliner: The kraftliner/testliner spread decreased by 4% w/w to EUR 165/t, while the testliner/OCC was up 1% w/w. US OCC price reached their lowest level in over a year (August price: USD 109/t -14% m/m and -31% y/y). US KLB exports up 14% YTD to 1.95mt (June: 308kt). AF&PA Q2 22A containerboard stats showed a 2% y/y increase in production, with the linerboard op. rate at 94.3% and the medium op. rate at 96%.
- Positive read-through for Sappi’s Packaging & Specialties: Sappi Europe to increase prices for its entire speciality paper portfolio by up to 18%, effective 12 September. GP sets new SBS price increase of USD 50/t (effective Sept).
- European paper sack deliveries increased by 5% y/y to 7.5mn units in 2021: In absolute terms, growth was led Building materials, followed by Cement.
- ICC Dutch TTF Gas Futures continue to rise: The price has now reached a high of EUR 241/MWH.
- Mondi insights: Mondi has collaborated with Essity and Dow to create new recyclable packaging for feminine care range. Mondi’s new mono-material for feminine care range is designed for recycling as the new packaging uses renewable material and a by-product from paper making as well as post-consumer recycled content.
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