• Pulp prices steady but stronger USD drives European pulp prices higher: NOREXECO pulp futures for CY 23E imply a 14-19% decline in Europe, and a decline of 11-22% in China. Demand and prices for resale pulp surge in China as weak RMB weighs on import market. YTD to August, China pulp imports are down 7% (SW -17% & HW -2%). August total was up 6% y/y (+22% m/m).
  • CWF and UWF extends gains: After factoring in a 30% discount to list pulp prices, the CWF/HW spread was down 2% w/w to EUR 207/t, while the UWF/HW spread decreased by 2% w/w to EUR 343/t. EUROGRAPH released July data for total European shipments: CWF outperforms all Graphic Paper grades, followed by UWF. CWF -5% y/y & -4% m/m (Europe deliveries -3% y/y & -7% m/m and exports -15% y/y & +10% m/m); CM -15% y/y & +2% m/m; UWF -6% y/y & -2% m/m (Europe deliveries -7% y/y & -6% m/m and exports -1% y/y & 18% m/m).
  • Containerboard prices stable but OCC down 8% w/w: The kraftliner/testliner spread was stable at EUR 167/t, while the testliner/OCC spread jumped 2% w/w to EUR 650/t. Russia’s Illim Group has postponed the ramp-up of its new 600ktpa kraftliner PM at its mill in Ust-Illimsk from H2 22E to H1 23E. Italy’s Pro-Gest’s 400kpta Mantova board mill restarts after extended shut. Klabin is investing to increase its paper bags capacity by c.11mn to 12mn units p.a from Q1 23E with the addition of a new conversion line at its Lages mill, located in Santa Catarina state.
  • Mondi news flow: Mondi partners with German machine producer Heiber + Schröder to launch new high-speed machine eComPack for automated packaging. This will enable eCommerce companies to automate the erecting, filling, and closing packaging process using the EnvelopeMailer solution.
  • Sappi news flow: Sappi completes modernization (EUR 35mn) of power plant boiler at Gratkorn site in Austria. Now, more sustainable fuels will be used instead of coal to power the paper machines at the company’s largest mill in Europe. During a transitional phase, the new state-of-the-art boiler will run on natural gas and biomass. In the future, predominantly biomass will be used. Sappi set to divest 3 of its European mills. Sappi’s planned disposals in Europe show us they are not worth nothing! Sappi is set to reduce its European Graphic Paper footprint by 38%, mostly impacting Coated Mechanical (CM: -69%) and Uncoated Woodfree (UWF: -100%), with a negligible impact on Coated Woodfree (CWF: -5%). European Packaging & Specialties exposure will also be impacted, with capacity set to decline by 26%.  The deal is expected to close in FQ 2 23E for a total EV of EUR 272mn (EV/EBITDA: 4.7x), with the net cash proceeds of EUR 212mn set to reduce net debt further but earmarked for growth projects.

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