• Mondi set to return c.€775mn (R15.8bn/£670mn) to shareholders following the sale of its Russian assets, in the form of a special dividend of €1.60/share (R32.6/£1.38): According to Mondi, the accompanying share consolidation is intended, as far as possible, to maintain the comparability of its share price before and after the special dividend is paid. Shareholders will receive 10 new shares for every 11 existing shares owned on the record date. The special dividend and associated share consolidation is subject to shareholder approval at a General Meeting to be held on 15 January 2024 (Download the circular).
  • PrimeStone express reservations around the Smurfit/WestRock merger & to consider strategic alternatives: “One such alternative would be a transformational combination with IP to create an uncontested pure-play global leader in corrugated packaging. SKG’s Board rejected International Paper’s friendly approach in 2018 on valuation grounds but many parameters have changed since then, and an attractive deal may now be possible. Beyond its strategic and long-term value creation merits, such a transaction could involve a combination at €50 per SKG share and be structured so as to be over c. 42% accretive for IP shareholders and lead to an immediate upside of c. 37% to SKG’s share price, with further upside overtime as the “SKG playbook” is applied to IP’s unrivalled asset base in North America.” Download the letter here: (https://primestonecapital.news/).
  • Paper pulp prices broadly stable: NOREXECO pulp futures for 24E infer the pulp rally is largely complete in China with some further improvement for hardwood (+3%) and softwood (+1%) pulp prices in Europe. Meanwhile, Suzano aims to increase BEK pulp prices for January shipments by $80/t in Europe and North America and by $10/t in China. Suzano noted balanced inventories throughout the chain, with lower prices in the Chinese resale market having limited impact in the market. November UTIPULP stats revealed that consumption in Europe softened by 2.7% m-o-m, while consumer pulp inventories increased by 1.9% m-o-m. Days of supply reached 29, up from 28 in October and up 8 days compared to the previous year.
  • Textile prices stable to down: The VSF op. rate was stable at 89% (89% last week) and VSF inventory days continue to edge up, now 13.0 (from 0 last week). Meanwhile, the theoretical VSF margin for Chinese producers deteriorated to -$88/t (from -$83/t last week). The Lyocell operating rate was stable at 70% (70% last week). According to CCF, the industry chain has weakened faster than expected. The spot VSF price has dropped and there is still an expectation for further declines.
  • DP prices hold their ground: The spot imported hardwood DP remained stable at $900/t, and the DP/pulp spread is $261/t (from $265/t last week). Meanwhile, the domestic DP was flat at ¥7,450/t ($1,046/t, a $146/t premium to imports). Sun Paper started to shut for maintenance, while Hunan Juntai continued to produce dissolving pulp. In other news, Georgia-Pacific’s permanently’ closed Foley pulp mill is being marketed for a potential sale. Meanwhile, Jari has again halted DP production (capacity: 250Kt/yr), while working on fundraising efforts to raise more capital.
  • Graphic paper prices remain stable in Europe: In the US, P&W shipments for November fell 16% y-o-y, while US purchases dropped 24% with paper inventory levels broadly flat. Across grades, UWF was the most resilient (-10%) and mechanical papers underperformed (-39%), while CFS shipments fell by 21%.
  • Containerboard under further pressure: Kraftliner softened 1%, while testliner was stable and OCC softened by 1%.

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