Forestry & Paper Weekly Industry Insights
Key message: Stora could be next to announce graphic paper closures and more newsprint producers mull over conversions to testliner.
Lecta: European CWF and Specialties Insights (Q2 20A)
Key message: Sappi’s volumes hold up materially better, but margin contraction in line. Lecta thinks Stora conversion is enough to balance CWF in Europe (July demand -26% y/y).
UPM restructuring: Closure plans & sale mainly impacting its Communication Papers Segment
Key message: Encouraging signs of Graphic Paper supply tightening in Europe, which provides 30% of global graphic paper (70mtpa).
SCA: Exits Publication Paper Segment
Key message: SCA exits remaining Paper exposure in favour of Pulp. A welcome announcement for Coated Paper and UWF producers in Europe.
Suzano: Q2 20A Insights (Pulp)
Key message: Suzano appears to be flushing out high cost producers. 55% EBITDA margin with bottom of cycle pulp prices, which are unsustainable, in their view.
Mondi: H1 20A Key Thoughts
Key message: Solid H1 with dividends resuming. H2 headwinds from planned downtime. Promising signs of China starting to fill its containerboard gap.
Lenzing: Q2 20A Insights (VSF & DWP)
Key message: Their DWP expansion in Brazil is on track. Low VSF and DWP prices unsustainable; however, VSF inventory overhang (125% of 5-yr average) to cap VSF prices in the ST.
Navigator Q2 20A: UWF and Pulp Insights
Key message: European UWF demand holds up better than the US. Navigator cautiously optimistic about UWF demand heading into Q3 but do expect some further pricing pressure. Pulp prices appear to have bottomed, in their view expecting a recovery from Q4.
Sappi Q3 20A Key Thoughts
Key message: EPS in line but gearing higher than expected. We were overly optimistic on Europe and North American margins, and too bearish on DWP volumes in SA.
Sappi Ltd: Q3 20e Insights
Key message: Liquidity likely to be favoured over profitability in the ST. Net debt/EBITDA should be below 4.5x by June 2021, however growth options will be limited.