• The pulp market is experiencing further price increases: Arauco, following the trend set by other Brazilian producers, has announced a $30/t increase for hardwood pulp prices to China, effective from June 1. In North America, further pulp price hikes are on the horizon as Paper Excellence (capacity: 3.3Mt/yr has announced a $100/t increase effective June 1. Following extreme rainfall, CMPC’s Guaiba mill in Brazil (capacity: 2.4Mt/yr) has resumed full operations as of May 21. Recent data from China Customs for April revealed that total pulp imports increased by 7% y-o-y and (+1% m-o-m), with year-to-date imports also up by 7%. This growth is largely driven by a 15% rise in bleached hardwood pulp imports, followed by a 4% increase in bleached softwood pulp. Dissolving wood pulp imports saw a slight y-o-y increase of 1% but a significant m-o-m decrease of 15%.
  • Cotton prices improved, while the VSF price remains below RMB 13,000/t: The ZCE cotton contract and the ICE cotton contract both increased by 2% and 6%, respectively while VSF held its ground. The VSF operating rate increased to 76% (from 73%) despite large-scale maintenance on Xinjiang-based units. Meanwhile, VSF inventory days decreased slightly to 11.5 (from 12), and the theoretical VSF margin for Chinese producers was broadly stable at -$93/t (from -$92/t).
  • Imported dissolving wood pulp prices stable despite new offers released: Chinese pulp mills have not fully switched back to producing DP as sufficient stock is still available. The spot price for imported hardwood DP stayed constant at $940/t, with a DP/pulp spread of $223/t. The domestic DP price too was stable at ¥7,660/t ($1,055/t), reflecting a $115/t premium over imports.
  • UWF capacity in Western Europe is set to be trimmed by around 4% following UPM’s planned closures: With “a durable recovery not expected, resulting in significant overcapacity in the market”, UPM plans to reduce its graphic paper footprint further in Germany with plans to permanently close its Hürth newsprint mill (330Kt/yr) and to shut down one UWF paper machine at the Nordland Papier (PM 3: 280 Kt/yr vs. total capacity of 1.2Mt/yr) in Dörpen. Production from both machines would cease latest the end of 2024. In the specialty papers sector, the Burgo Group has announced a 10% price increase on its Mosaico range (labels, wet strength paper, flexible packaging, and carton board), effective July 1. In Asia, APP is targeting price hikes of 5-10% for all fine paper grades, driven by elevated pulp costs and increased freight rates.
  • Momentum continues to build for containerboard producers: Kraftliner was again stable, while testliner rose a further 1%. OCC too continues its upward trend, rising a further 3% to €149/t, now up 49% since the start of 2024. Progroup has now taken over Sappi’s Stockstadt mill; and is expected to add up to 750Kt/yr of new recycled containerboard capacity by 2030. The company currently has around 1.8Mt/yr of testliner capacity in Germany.
  • Heinzel Group’s recent sack kraft conversion is up and running smoothly: Following the conversion from graphic paper at their Steyermuhl mill in Austria, the 150Kt/yr machine is running smoothly to produce brown and white kraft papers. The Starkraft division now has a total capacity of 350Kt/yr.

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