• Paper pulp prices in Europe advance 3-4%: NOREXECO pulp futures for 24E infer that hardwood prices in China should fall around 4% in 2024, with some upside for prices in Europe (hardwood +2% & softwood: +1%). UTIPULP statistics for December revealed that consumption of pulp in Europe fell by 8.1% m-o-m, while consumer pulp inventories edged up 0.8%. This meant days of supply were flat m-o-m at 29l; however 6 days higher y-o-y. In North America, the Paper Excellence Group announced a price increase of $50/t for bleached softwood kraft, effective with January business as well as a $30/t increase for its global markets.
  • VSF edged up 1%, while cotton and polyester prices retreat: The VSF op. rate dropped to 85% (from 89%), with some Xinjiang-based units shut for maintenance. Meanwhile VSF inventory days edged down further, now 11.0 (from 5 last week). The theoretical VSF margin for Chinese producers improved to -$84/t (from -$95/t).
  • The DP market was relatively quiet: The spot imported hardwood DP is still $880/t, and the DP/pulp spread is $227/t. The domestic DP price was flat at ¥7,360/t ($1,025/t, a $145/t premium to imports). The two Chinese major producers gradually converted to paper pulp production, but there were still stocks available for sale, so discussions were ongoing.
  • Further pressure on graphic paper prices in Europe: Most grades softened around 1% except UWF, which was stable. Meanwhile, Sappi has concluded the consultation process for its Lanaken Mill in Belgium and ceased paper production (530Kt/yr CWF) at the mill in December. The closure of the site should be completed during CY Q2 24E. In other news, UPM has concluded negotiations on possible temporary layoffs at its pulp, timber, communication paper and biofuel businesses in Finland. “Presently, there is no need for temporary layoffs”.
  • Mixed moves for containerboard prices in Europe: Kraftliner was stable, with slight pressure on testliner, while WT kraftliner eased 1%. Meanwhile, OCC fell 2% w-o-w to €99/t. In other news, Schumacher Packaging has successfully started up its PM2 in Myszków, Poland. The rebuild doubled production capacity to 365Kt/yr and improved process efficiency.
  • Starkraft (Heinzel Group) is set to increase kraft paper prices by 10% (from 1 April): In Q2 24E, Starkraft will start its third paper machine in Steyrermühl (Austria). With this addition Starkraft will offer a complete assortment of bleached and unbleached kraft papers and will expand its total annual production volume to 350Kt/yr.
  • Mondi’s proposed special dividend and associated share consolidation was approved at the General Meeting on 15 January: This means the share consolidation will be effective on 29 January when the new shares begin to trade, and payment of the special dividend will take place on 13 February.
  • Sappi set to redeem the residual R1.2bn 5.25% convertible bonds due 26 November 2025: Most holders will likely favour the conversion to Sappi shares instead of receiving cash. Based on current shares in issue of 558,85m, the conversion of the 35m shares equates to a dilution of around 6%, with negligible saving in interest costs ($0.01/share p.a).

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