Research

ey message: Sappi is set to reduce its European Graphic Paper footprint by 38%, mostly impacting Coated Mechanical (CM: -69%) and Uncoated Woodfree (UWF: -100%), with a negligible impact on Coated Woodfree (CWF: -5%). European Packaging & Specialties exposure will also be impacted, with capacity set to decline by 26%. The deal is expected to close in FQ 2 23E for a total EV of EUR 272mn (EV/EBITDA: 4.7x), with the net cash proceeds of EUR 212mn set to reduce net debt further but earmarked for growth projects.

Key message: Europe pulp prices rise further on the back of a stronger USD. CWF and UWF price further in the green. CWF shipments in the red in August but outperform all other grades. Containerboard prices stable, while OCC down a further 8%. Dutch TTF Gas Futures price is now EUR 204/MWH. Sappi’s planned disposals in Europe show us they are not worth nothing!

Key message: Pulp prices stable, for now. August pulp producer stocks increased by 1 day m/m to 43, while shipments were up 8% y/y & 6% m/m. Further gains for Graphic Paper producers in Europe. August US CFS shipments saw first decline since October 2021. OCC prices tumble 13% w/w, while various testliner producers take downtime. Dutch TTF Gas Futures prices is now EUR 187/MWH.

Key message: ICE Cotton contract down 5%, while VSF drops 1%. Cotton is trading at a 4% premium to VSF. Spot DP is stable at USD 1,125/t. VSF inventory days mark first decline in over 10 weeks to 28.0, and the average op. rate improves to 58%. VSF theoretical profit is further in the red at -USD 207/t (VSF/DWP spread -3% YTD). Grim update from Lenzing.

Key message: Cotton +2% w/w, while VSF drops 3%. Cotton is now trading at a 4% premium to VSF. Spot DP is stable at USD 1,125/t. VSF inventory days tick up to 29.0, while the average op. rate is stable at 52%. VSF theoretical profit is further in the red at -USD 199/t (VSF/DWP spread -9% YTD).