- Pulp prices continued to rally (US: +3%; Europe: +2-3% and China: 0-1%) as supply challenges persist: APP shut its pulp line (1.1Mt/yr BEK) at their Jambi mill in Indonesia following a boiler explosion on 28 April. Meanwhile, CMPC plans to resume full capacity at its Guaiba mill in Brazil soon. In other news, Canfor Pulp Products is set to indefinitely curtail one production line (300Kt/yr) at Northwood facility in Prince George, BC due to the decline in availability of economic fibre in the northern BC region. PPPC statistics for March confirmed that fundamentals for pulp continued to improve. Days of supply reduced to 41 (-1-day m-o-m) with shipments increasing by 8.3% y-o-y (+8.5% m-o-m). The shipments-to-capacity averaged 92% in March, up from 91% in February. UTIPULP statistics for April revealed that European consumer pulp inventories increased by 1.2% m-o-m (+1.5% y-o-y), while consumption softened by 2.1% (+19.3% y-o-y). Days of supply was stable at 25 (April 2023: 23 days).
- Mixed performance for textile prices: Cotton slumped 3-4%, while polyester and VSF were broadly stable. The VSF operating rate improved to 84% (from 82% last week) with VSF units in East China coming back on stream from maintenance. Meanwhile, VSF inventory days dropped to 13 days (from 14 last week) and the theoretical VSF margin for Chinese producers strengthened to -$92/t (from -$100/t).
- The dissolving pulp market temporarily stabilized after the May Day holiday: Hunan Juntai continued to produce dissolving pulp and Sun Paper was temporarily producing paper pulp but planned to switch back to DP. The spot imported hardwood DP remains the same at $940/t, and the DP/pulp spread is $227/t. The domestic DP price is ¥7,660/t ($1,058/t, a $118/t premium to imports).
- Containerboard producers slate further price hikes: In North America, Pratt Industries announced a $50/t linerboard and $80/t corrugating medium price increase for June 1. Klabin has announced an 8% price increase for its kraftliner and white top liner in Brazil from June. Klabin is also raising prices in international markets (€50/t In Europe and $60/t in other geographies). Saica (3.3Mt/yr of recycled paper for corrugated board) too is set to increase testliner prices by €60/t due to higher wastepaper prices. OCC prices continued to increase by 6% to €140/t (+40% y-t-d) as furnish needs are growing, with testliner operating rates estimated at 84-87% in most major producing countries bar Italy. Overall demand is increasing from new RCCM machines (VPK’s 500Kt/yr PM in Alizay, France; Norske Skog’s 210Kt/yr PM in Bruck, Austria, and the plan to start production on a 650Kt/yr machine at Model’s Eilenburg mill in Germany during June). In other news, MEPCO has commissioned Voith to construct its new PM5 450Kt/yr lightweight recycled containerboard machine in Jeddah. Construction is expected to start in Q3 24E with ramp-up in Q4 27e.
- Further momentum building for sack kraft producers: Starkraft is set to increase sack kraft prices by 10% from July. Starkraft, part of the HEINZEL GROUP, launched its PM6 (150Kt/yr) at the Steyrermühl paper mill in Austria, with production capacity now totalling 350Kt/yr.
- Graphic paper prices largely stable: With pulp prices rising by 3-4%, graphic paper margins came under pressure, with the UWF/pulp spread falling by 7%, while the CWF/pulp spread plummeted by 11%. Meanwhile, UWF producers in Asia are slating price hikes from June/July onwards (APRIL: +$50/t and Oji Paper: at least 5%) due to rising costs.
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