• Paper pulp prices stable this week except for hardwood in Europe, up 1% w-o-w: NOREXECO pulp futures keep edging up and for 24E imply a healthy improvement for hardwood prices in Europe (+17%) and China (+4%). Europulp statistics for August reveal that stocks of woodpulp at European ports rose 2.9% m-o-m and are 35.7% higher y-o-y. Georgia-Pacific to permanently close its Foley fluff (246Kt/yr) and specialty DP mill (267KT/yr) by 1 November, slashing 513KT/yr market pulp capacity. Although the closures relate to specialty cellulose, we believe this will be positive for commodity DP and Sappi as it is likely that Rayonier will produce less commodity DP now to fill increased specialty DP orders. In other news, Jari is attempting to restart its 250Kt/yr DP mill in Brazil. Eldorado has joined Suzano by increasing BEK prices by $30/t in China and by $50/t in Europe and North America from 1 October.
  • VSF price stable, while cotton and polyester soften 1% and 2%, respectively: The VSF op. rate remains stable at 88% (88% last week). VSF inventory days keep edging down further to 5 (from 9.0 last week), well below the historical average of around 20 days. This was driven by spinners still active and able to take delivery of the goods and at the same time, by optimizing the production structure and reducing some differential fibres and off-grade products inventory. Meanwhile, the theoretical VSF margin for Chinese producers is just in the red at -$9/t (from +$3/t last week). Lyocell market was stable with prices flat and the operating rate around 78%.
  • DP prices continue to gain traction: As of today, the imported hardwood DP is now trading at $864/t, and the DP/pulp spread is stable at $313. The domestic DP price too edged up 1% to at ¥7,250/t ($990/t, a $130/t premium to imports). Chinese pulp mills (Hunan Juntai and Sun Paper) were steadily producing dissolving pulp with domestic prices potentially reaching ¥7,300-7,500/t.
  • Graphic paper prices stable, and wood free prices continue to remain elevated vs. their historical averages: CWF spot vs. historical average +18% vs. 3-Yr; +30% vs. 5-Yr and +45% vs. 10-Yr. UWF spot vs. historical average +8% vs. 3-Yr; +15% vs. 5-Yr and +25% vs. 10-Yr. In other news, the October price increase (+2% from 1 October) announced by Billerud has been “indefinitely postponed” or “delayed” as market conditions were not supporting such a move. Additionally, Billerud will take its Escanaba, MI, coated paper mill down for annual maintenance and market-related downtime for two weeks in the beginning of October, “to balance production with demand,” US CFS prices were too stable in September (80-lb economy sheets: $1,685-1,785/t, 80-lb premium sheets: $1,885-1,945/t, and No. 3, 60-lb rolls: $1,430-1,470/t).
  • Containerboard prices stable while OCC edges up further by 1% w-o-w: Metsä Board completed the development programme for its white kraftliner mill in Kemi, Finland. The Kemi paperboard mill is the world’s largest producer of coated white top kraftliner. Annual production capacity was increased by 40Kt/yr to 465Kt/yr, with the majority being sold in Europe and North America. SCA inaugurated its new kraftliner production facility with increased capacity in Obbola, Sweden. This means that the paper mill has the world’s largest kraftliner machine with capacity having increased from 450Kt/yr to 725Kt/yr.
  • Sappi news flow: Sappi Europe’s Kirkniemi Mill in Lohja, Finland, has successfully made the switch from using fossil fuels to renewable energy (€16.5mn).

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