• Pulp prices start edging down in Europe: NOREXECO pulp futures for CY 23E imply a 12-21% decline in Europe, and a decline of 9-20% in China. Recent UTIPULP data for November showed European pulp consumption was down for a third consecutive month (-13% y/y and -8% m/m), while inventories were up 5% y/y (flat m/m), and inventory days increased by 5% y/y (+5 m/m) to 21. Mercer International (2.3mtpa of total pulp capacity) is set to take three weeks of downtime at its Celgar mill in Canada, effective March 2023. This is on the back of a shortage of fibre availability.
  • Coated mechanical shows first signs of weakness across Graphic Paper grades in Europe: After factoring in a 30% discount to list pulp prices, the CWF/HW spread was up 4% w/w to EUR 334/t, while the UWF/HW spread was also up 4% w/w to EUR 439/t. Norske Skog has stopped production of newsprint on PM 1 at its Golbey mill in France (235ktpa). This machine is being converted to 550ktpa of containerboard, with production expected to ramp up in Q4 23E.
  • Containerboard prices weaken further, with kraftliner and testliner down 3% ytd: The kraftliner/testliner spread increased by 4% w/w to EUR 172/t, while the testliner/OCC spread decreased by 1% to EUR 601/t. OCC dropped 3% w/w to EUR 70/t. In the US, Domtar has started production at its recently converted ($ 350mn) recycled containerboard mill (660ktpa) at it its Kingsport Mill TN). Norske Skog is expected to start producing containerboard at its recently converted Bruck mill (210ktpa) in Austria in Q1 23E.
  • Negative read-though for European containerboard as Stora Enso is in talks to initiate temporary layoffs at four if its mills in Finland. This will impact 1.2mtpa (mainly kraftliner) of containerboard capacity (roughly 5% of total European capacity) and 0.3mtpa of FBB capacity. This is “to prepare for fluctuations in demand”. This follows on from plans by UPM to initiate potential layoffs at its graphic paper mills in Finland (2.3mtpa of capacity: mix of CWF/CM and UCM).
  • Trading update: Rayonier Advanced Materials provided a Q4 22E trading update, expecting revenue in the range of $488-508mn and adjusted EBITDA of c. $52-56mn, implying an EBITDA margin of 11%. Price negotiations for their cellulose specialties products for 2023 has resulted in higher contracted prices vs. 2022.
  • Mondi news flow: Mondi has partnered with Noel Alimentaria to support paper-based packaging solutions for food products. Mondi’s recently acquired Duino mill has restarted after market-related downtime. Burgo is to continue managing the sales of Duino’s coated mechanical paper output through 2023.

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