- Mondi Board has decided that the DS Smith transaction would not be in the best interests of its shareholders: Following a period of due diligence, and after carefully considering the value the combination with DS Smith would deliver to Mondi´s shareholders, Mondi does not intend to make an offer for DS Smith. Earlier this week, the boards of International Paper and DS Smith announced that they had reached agreement on the terms of a recommended all share combination. The terms of the combination valued each DS Smith share at GBP 4.15/share. Upon completion of the combination, DS Smith Shareholders will own 33.7% and International Paper Shareholders will own 66.3% of the combined company.
- Pulp prices continue to extend gains, up around 3-4% in Europe but stable in China. UTIPLUP statistics for March revealed that Europe pulp consumption increased by 10% y-o-y (+3.2% m-o-m), while consumer pulp inventories decreased by 1.5% y-o-y (-1% m-o-m). In other news, Arauco is set to present its Sucuriú project to the board by late 2024. This will be Arauco’s first development in the pulp segment outside of Chile, and will be located in Inocência, Mato Grosso do Sul state, in midwestern Brazil. Arauco plans to start operations at the facility in 2028, with a second phase of expansion to take place around 2032. Each bleached eucalyptus kraft pulp line will have the capacity to produce5Mt/yr.
- All textile prices came under pressure this past week: The ICE Cotton contract slumped by 4%, while polyester softened by 2%. The VSF price too declined by 2% as producers started offering discounts and order volumes were at the normal level. The VSF operating rate eased to 80% (from 82% last week) as a VSF plant in South China shut lines for planned maintenance. Meanwhile, VSF inventory days ticked up to 14 days (from 13.5 last week) and the theoretical VSF margin for Chinese producers weakened to -$89/t (from -$58/t).
- More offers were released in the dissolving pulp market and trades also increased this week: In the Chinese market, Sun Paper maintained normal production, and Hunan Juntai was temporarily producing paper pulp. The spot imported hardwood DP remains the same at $942/t, and the DP/pulp spread is $255/t. The domestic DP price is ¥7,660/t ($1,055/t, a $113/t premium to imports)
- Further momentum for paper packaging grades in Europe: The kraftliner price increased by 3% (+2% y-t-d), and testliner was stable (+6% y-t-d). Meanwhile, waste paper (OCC) jumped 12% to reach €125/t. Saica has announced a price increase effective April 16 of €60/t for linerboard and corrugating medium, €50/t for semichemical medium, €30/t for kraft substitutes, €40/t for recycled white top linerboard, and €25/t for white coated linerboard. The Model Group is set to start up its new 650Kt/yr recycled containerboard machine in June at its Eilenburg mill in Sachsen, Germany. The unit, a converted newsprint machine, had been due to start operations in April. Meanwhile, The Heinzel Group has started discussions over discontinuing operations at its Raubling recycled containerboard mill (230Kt/yr) in southern Germany. As a reminder, this mill was purchased from Mondi in 2015 (EV of €25mn).
- Graphic paper prices in Europe were mostly stable, except for coated mechanical paper which softened by 1% (-6% y-t-d): The Burgo Group will implement a further step of price increase with a minimum target of 5-7% due to the recent and further expected increases in raw materials and logistics, to preserve margins. AF&PA statistics confirmed a slight softening in the March US printing-writing paper shipments, which were down 1% y-o-y. However, fortunes were mixed across grades. UFS shipments remained flat, CFS shipments increased by 5%, and CM shipments decreased by 18%.
Download Report
