- Pulp shows first signs of weakness: NOREXECO pulp futures for CY 23E imply a 15-19% decline in Europe, and a decline of 11-22% in China. Ence’s Pontevedra BEK pulp mill (515ktpa of BEK pulp) still down as firm works on alternative solution for water supply. The mill suspended operations in July due to the drought. Jari’s DP mill in Brazil completes three months of downtime (further three months expected), while seeking financial aid (USD 6.5-7.0mn) to conduct maintenance work to resume production at c.75-80% of capacity (DP: 250ktpa) in December.
- Graphic Paper in the green: After factoring in a 30% discount to list pulp prices, the CWF/HW spread was up 16% w/w to EUR 209/t, while the UWF/HW spread +8% w/w to EUR 352/t.
- Containerboard prices stable, while OCC under the pump further: The kraftliner/testliner spread decreased by 1% w/w to EUR 164/t, while the testliner/OCC spread increased by 3% to EUR 672/t. OCC declined by 17% w/w to EUR 102/t. US kraft linerboard exports pick up slightly in August to 331kt, remain up by 14% YTD (2.605mt).
- Europe FBB: Iggesund to increase board prices by EUR 120/t and Metsä Board has announced a EUR 100/t price increase for FBB (& a storage surcharge of EUR 50/t for 30 days) from 1 Nov.
- Ban on P&P imports and exports to and from Russia expands with new EU sanctions: The 8th package of sanctions came into force on October 6. The new sanctions include a sizable expansion of the bans on pulp and paper (P&P) products (includes a variety of wood pulp and recovered paper, specialty paper, uncoated paper and board, sack kraft paper, testliner & kraftliner).
- Mondi reported strong Q3 22A results: EBITDA was up 55% y/y to EUR 450mn (-7% q/q). We remain OVERWEIGHT with a potential special dividend of ZAR 62/share (23%) being the key ST catalyst (Download Report).
- UPM substantiates positive outlook for 2022 following record strong Q3 22A results: Q3 22A sales increased by 36% y/y to EUR 3,420mn, with EBIT up 84% y/y to EUR 779mn. “Exceptionally high uncertainty continues in the business environment, as highlighted in UPM’s previous outlook. However, during Q3 no major downside risks materialised and UPM reached record quarterly earnings. The quarter was successful in all businesses. UPM Energy, UPM Specialty Papers, UPM Raflatac, UPM Communication Papers and UPM Biofuels all made new record quarterly results. In addition, UPM Fibres and UPM Plywood achieved strong results. UPM reports Q3 results on 25 Oct.
- Metsä Group announces better than expected comparable operating result in Q3 22A: Metsä guided in its H1 22A results, that its comparable operating result in Q3 22E was expected to be similar to Q2 (c.EUR 330mn). Mainly due to better than forecast profitability development of Metsä Fibre, Metsä’s comparable EBIT in Q3 22A was better q/q and reached c.EUR 391 mn. Metsä reports Q3 results on 27 October.
- Reach Q3 mixed trading update: Digital revenue increased by 1.1% y/y (July & August: +5.9% vs. September: -8.1%), while Print revenue declined by 2.9% y/y. July and August were more indicative of underlying revenue performance as Q3 and September was distorted by the impact from the passing of The Queen which benefited circulation but significantly reduced advertising due to the blackout during national mourning. Heading into Q4, historically the strongest period for advertising, the company expects circulation revenue to be supported by increased cover prices, while advertising revenue should benefit from seasonally stronger yields, particularly around Black Friday and Christmas and from the football World Cup which starts in November.
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