• Mixed moves for paper pulp: Pulp prices in Europe continue to weaken (down 3-5%) and were stable in the US. Meanwhile, hardwood pulp continues to edge up in China (+1%). NOREXECO pulp futures for 24E imply a healthy improvement for hardwood prices in Europe, while prices in China are expected to moderately increase. PPPC statistics for June saw an improvement in the pulp inventory overhang with producer inventories dropping seven days to 48 days-of-supply as shipments improved by 6.3% y-o-y to reach 4.9Mt.
  • Textile prices mostly in the green with cotton (+4%) and VSF leading gains (+2%): The VSF op. rate eased slightly to 82% (84% last week) as some Shandong and Jiangsu-based VSF plants lowered operating rates or shut lines for maintenance. VSF inventory days edged down to 13.5 (from 15 last week). The theoretical VSF margin for Chinese producers improved to -$21/t (from -$46 last week). The Lyocell market was stable with prices flat and the operating rate around 70%. Meanwhile, China retail sales in July were lacklustre with growth moderating to 2.5% (missing expectations) from 3.1% in June. In other news, Altri will decide on a new 200Kt/yr DP project at its Galicia mill in Spain by the end of 2023.
  • Domestic and imported DP prices stable: Imported hardwood DP is still trading at $840/t as mills from the southern hemisphere released unchanged offers, while northern hemisphere producers are yet to announce. The DP/pulp spread eased to $316/t from $325 last week. The domestic DP price is also stable at ¥7,080/t ($977/t, a $137/t premium to imports) and both Hunan Juntai and Sun Paper were producing paper pulp. Despite an improved trading mood, sufficient DP supply and the large DP/pulp spread is likely to cap DP prices for now.
  • Graphic paper prices in Europe continue to soften: The CWF price continues to remain elevated vs. its historical average (+22% vs. 3-Yr; +35% vs. 5-Yr and +50% vs. 10-Yr). Meanwhile, the UWF price too remains elevated but to a lesser extent (+10% vs. 3-Yr; +18% vs. 5-Yr and +28% vs. 10-Yr). In the US, AF&PA statistics reveal that total P&W shipments dropped by 25% y-o-y in July, while total US P&W purchases fell 32% y-o-y. UFS recorded the smallest decline of 14%. Meanwhile, net imports in all 3 major grades decreased in June compared to the same month last year.
  • Containerboard prices stable and testliner producers confirm further downtime: Amid weak demand and even though wastepaper availability has been reduced, OCC prices continue to weaken (down 1% w-o-w). Schoeller shammer is set to close its 250Kt/yr recycled containerboard PM for a week at the end of September at its Düren mill in Germany. Starting in August, Pro-Gest is taking three weeks of downtime at its 400Kt/yr recycled containerboard mill in Mantova, Italy. In other news, Fibre Box Association statistics reveal that US box shipments have dropped 7.3% from July 2022 through June 2023.
  • Sack kraft prices in Europe pulled back in July: Prices for unbleached grades in July dropped by 8% m-o-m (-€125/t) in Europe. Meanwhile, bleached grades eased by 3% (-€50/t). In the US, the AF&PA statistics for July show that total packaging papers & specialty packaging shipments remained essentially flat y-o-y (+0.4%). Through July, they were down 3% y-o-y. Shipments of the biggest subgrade in unbleached packaging papers, bag & sack were 81Kt in July, down 1.1% y-t-d. The MM Group has postponed its €660mn Kwidzyn investment to convert PM1 from copy paper to sack paper.in Poland to 2024. Meanwhile, WestRock will permanently close its 510Kt/yr linerboard (380Kt/yr), kraft paper bag (60Kt/yr), and pulp mill (70Kt/yr), in Tacoma, WA. In other news, the Segheza Group has nearly doubled production of paper packaging at its plant in Lobnya in Moscow over the last two years with production of 35.2mn paper sacks in H1 23A (21: 29.8mn & 22: 52.5mn).

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