PPI Pulp & Paper Week

Paper, packaging and fiber market news and prices for North America
July 2022

In this abbreviated issue for non-subscribers:
  • Headlines
  • Prices: Market pulp
  • Liner: Majors raise margins
  • RBP: Prices fall once again in China
  • Boxes: GP to add corrugator
  • Specialties: Thermal prices soar
  • Newsprint: NA 1H demand off 6%
In the headlines
US box shipments off by 2.3% in 2Q, contacts cite tough comp, stock correction, wait for holidays

US actual box shipments declined 2.3% in the second quarter as a supply-chain “inventory correction” this spring slightly lowered demand and as this year’s volume total was dwarfed compared to the record or near historic result during last year’s box demand surge.

The drop cooled what has been a fast-running, supply-short marketplace in 2020-2021 in which US actual box shipment increased by a total of almost 6% in two years, the highest two-year growth in 27 years.

Boxmakers across North America have told Fastmarkets’ PPI Pulp & Paper Week the last several months about the slighter demand. Their expectation was that market demand would pick back up after the inventory correction is done and as holiday shopping typically starts to hum in either late August or September.

As fluff prices hit all-time highs, GP announces capacity expansion; US BSK flat, BHK gains $30-40

Fluff prices worldwide have reached a new zenith, as an historical pricing run brought levels to new all-time highs in July. US and European fluff effective list prices gained another $80/tonne to close July at $2,230/tonne, according to Fastmarkets’ PPI Pulp & Paper Week surveys, expanding the year-to-date run to $590, and further inflating the record list prices.

Against a backdrop of low consumer inventories, crimped supply chains, and strong demand, Georgia-Pacific (GP) the world’s 2nd biggest fluff pulp producer, this week announced its capacity would expand. GP said on July 27 that it is investing about $80 million to add fluff capacity at its 938,000 tonnes/yr GP Cellulose Alabama River market pulp mill near Monroeville, AL.

Largest NA UFS paper suppliers set 4-7% price rises for September; coated mills announce price hikes too

North America’s four largest uncoated freesheet (UFS) paper producers by capacity – Domtar, Sylvamo, Pixelle, and Boise Paper/Packaging Corp of America (PCA) – announced new price increases for September of about 4-7% or $60/ton. The four companies combine manage about 73% of the North American UFS market capacity, according to Fastmarkets data.

One contact told Fastmarkets’ PPI Pulp & Paper Week that the UFS supply-demand condition in North America should “remain tight through Q1 (2023).”

No. 1 largest UFS producer Domtar on July 19 started the latest avalanche of price hike announcements. The company set a 4-7%, or $60/ton, price increase on its UFS paper, effective with shipments Sept. 1.

No. 2 Sylvamo, No. 3 Pixelle Specialty Solutions, and No. 4 Boise/PCA separately announced September price increases on July 25.

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Key charts and tables
Key grades
Containerboard/boxes

IP, PCA raise margins from spring liner rise; tough comp yields flat to down 2Q box volume

North American containerboard and corrugated box majors International Paper (IP) and Packaging Corp of America (PCA) underperformed growth-wise on their second-quarter corrugated box shipments, against possibly the highest ever year-over-year comparison last year, but both reported higher margins and profits for this year’s second quarter.

They did so because of implementing box price increases following a spring $60/ton linerboard price increase in North America. Executives with both firms were positive about implementation, with PCA saying that most of its hike was in for the second quarter and IP calling its implementation “strong.”

Recycled brown pulp

RBP slips $10 to $455/tonne, down by $20 in three months

Bulk grade markets have cooled this summer, and pricing for US recycled brown pulp (RBP) decreased $10/tonne to $455/tonne net CIF to China in July as mills reduced their US RBP imports, according to Fastmarkets’ PPI Pulp & Paper Week pricing survey and market report.

The third consecutive month of pricing declines for RBP has slashed pricing by $20/tonne since May. Pricing fell $5/tonne in both May and June as downtime in China and now India curtailed demand.

Contacts told P&PW this week that demand and pricing in July weakened vs one month ago. “A weak China is dragging down many of the Asian economies that are so dependent on China,” a contact said.

Containerboard

WestRock to acquire remaining Grupo Gondi shares for $1 billion

WestRock this week signed an agreement to purchase a remaining 67.7% share of Mexico’s Grupo Gondi in a $1 billion-plus deal that grows the packaging giant’s presence in Mexico, a market that counts heavily on US unbleached kraft linerboard and recovered paper for exporting goods into Texas and the USA. The two companies have maintained a joint venture in Mexico for six years. With the 67.7% share, if approved, WestRock would fully own Grupo Gondi.

WestRock did not provide comments this week to Fastmarkets’ PPI Pulp & Paper Week on its agreement to acquire the 67.7% share. WestRock executives report on second-quarter earnings on Aug. 4.

The $970 million deal also would include the assumption of debt, for an estimated value of $1.763 billion. The deal is expected to close by the end of this year.

Kraft linerboard

PCA plans Nov./spring 2023 work to add 265,000 tons/yr on Jackson’s J-3 machine

Packaging Corp of America (PCA) expects to shut its unbleached kraft linerboard J-3 machine at the Jackson, AL, mill for about one month for a project this November that is to add about 125,000 tons/yr of capacity, PCA chmn and CEO Mark Kowlzan said this week during an earnings call with analysts on July 26.

In addition, the company will do a second project on the J-3 machine next spring. The work in the spring will increase the PM’s capacity by an additional about 140,000 tons/yr. More dryer cans and drying capacity will be added during the work next year, Kowlzan said.

Tissue

GP breaks ground on its $500 million TAD project; K-C2Q consumer tissue prices up 6%

Georgia-Pacific (GP) last week said it broke ground on a $500 million project that includes installing a through-air-dried (TAD) tissue paper machine at its Broadway Mill in Green Bay, WI.

GP announced the project in December. The project calls for the TAD and converting equipment, and related infrastructure additions, and is to, according to the company, enhance GP’s retail consumer tissue and towel business.

Seven paper machines now run at the Broadway mill complex. The machines make bath tissue, paper towels, napkins, and facial tissue for both retail and Away-from-Home uses, the company said.

Corrugated

GP plans corrugator in PA for 2023, Pratt set on TX startup, IP wants to add converting cap

Georgia-Pacific (GP) announced about a $34 million modernization project for adding a new corrugator at its Bradford, PA, corrugated converting plant, the company said in an announcement that was reported on LinkedIn.

This corrugator could start running in first-quarter 2023 or later in the year and as late as first-quarter 2024, based on Fastmarkets’ PPI Pulp & Paper Week research.

The GP Bradford corrugator would be the sixth new one installed in Pennsylvania since 2019 by four integrated firms including three of the largest five in North America and also by two independent boxmaker companies.

Specialty paper

Thermal POS prices up 37% in July YOY, are 85% higher than at start of 2021 in NA

Thermal point-of-sale (POS) paper prices soared in North America since the start of 2021 due to global capacity reductions, antidumping duty (ADD) rates on some imports, and big cost increases, especially for shipping, inland transportation, energy, pulp, and chemicals, according to market contacts.

The 48 g/m2 thermal POS paper grade has had seven price increases since the beginning of 2021 or in the last 2½ years, and its list price is now 85% higher than in January of 2021, according to Fastmarkets’ PPI Pulp & Paper Week pricing survey.

Newsprint

NA newsprint demand falls 6% in 1H YOY, op. rate remains above 90%

North American newsprint demand through June of 2022 declined 6% to 729,000 tonnes when compared with demand in the first half of 2021, the Pulp and Paper Products Council (PPPC) reported.

Overseas newsprint exports fell 12.7% to 343,000 tonnes in the period. North American sales to Europe increased 10.2% to 60,000 tonnes in the first half year-over-year, and exports to Latin America climbed 4.2% to 101,000 tonnes in the same period. On the other hand, shipments to Asia were 27.5% lower, at 227,000 tonnes.

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