In This Issue: the WTO Panel’S Ruling Followed the Country’S WTO Obligations

PAPER, PACKAGING AND FIBER MARKET NEWS AND PRICES FOR EUROPE, THE MIDDLE EAST AND AFRICA October 13, 2016 | Vol. 31, No. 38

New RISI News & Prices App Sack kraft paper prices poised for increase “We are finally in for some interest- 7-10% increase in overseas markets as ing times,” said a source commenting of October 1, while Mondi announced on the latest developments on the sack plans to raise its prices by Euro 60/ kraft market. Price levels were flat in tonne for all deliveries as of October the market during the third quarter, 15 and by 8-12% for all new orders. but unbleached semi-extensible paper Later, Nordic Paper also announced a producers finally feel like the market Euro 60/tonne increase for all new or- has come back their way after a series ders from November 1 and Gascogne of price drops in recent years. Euro- a Euro 40/tonne hike with immediate pean producers have unveiled price in- effect. Some producers decided not to creases, running the gamut from Euro announce hikes publicly, but have in- 40/tonne to Euro 80/tonne on the un- formed customers of Euro 50-60/tonne bleached semi-extensible side. They increases from October or November. are quite sanguine about their pros- “We already have fixed prices until the pects, mentioning improved overall end of the year with most important demand combined with some factors customers. For new customers, we will likely to lead to a relative tightening of consider a higher price already in Q4, the global market. but we are not sure about the amount On the bleached side, the market is and we might try [to implement the set to continue on a quiet path until the hike] in two steps: Euro 20-30/tonne end of the year but a price hike could in November-December and the rest be in the cards at the start of next year. maybe later,” a producer said. Suppliers to lift unbleached prices: Underlying demand picks up: Pro- BillerudKorsnäs made the first move ducers are quite optimistic about their Did you know... on prices, announcing a Euro 80/tonne prospects at the moment, pointing out …that copying or electronic forward- increase on all sack kraft paper grades that overall demand has improved after ing of this publication is illegal in from October 1. Segezha and Mondi a generally dull 2015 and start of 2016. virtually every country around the followed suit. Segezha asked for a world? We rely on subscription fees to Euro 50/tonne price hike in Europe and ››› continued on page 6 support our worldwide editorial team. Illegal copying hurts our ability to bring you the very best news - and may even subject you to a fine. Russia agrees to WTO import duties for paper Russia has agreed to comply with paper products were 15% or 10% in- For information on discounted the decision of the World Trade Or- stead of the 5% Russia agreed when it bulk subscriptions, please e-mail [email protected]. (For general sub- ganization (WTO) that it should low- joined the WTO in 2012. scription and other inquiries, contact er its import duties on certain paper Execution date unclear: It is still [email protected].) products, including medium weight unclear, however, when the import du- coated (MWC) paper, coated woodfree ties will be adjusted. (CWF) paper, GC/GZ cartonboard and The Russian Ministry of Economic board for liquid packaging. Russia said Development Minekonomrazvitiya told that it decided not to appeal the WTO PPI Europe that the WTO procedure panel’s report, which was issued in Au- foresees a “reasonable period of time” gust, according to the WTO. to bring the tariffs into accordance with In This Issue: The WTO panel’s ruling followed the country’s WTO obligations. a request by the European Union (EU) “The implementation timeline Price Watch: Germany 2 to establish a dispute panel in March will be finalized after consultations 2015 after formal consultations with with the EC [European Commis- Russia on the matter proved fruitless. sion],” a spokeswoman at Mineko- Sniace restarts production 3 The EU argued then that following its nomrazvitiya said. She added that the WTO accession, Russia continued tax- adjustment to the duties must then be Mondi buys Russia’s Beepack 4 ing a number of products across vari- ratified by the Russian government as ous sectors more heavily than agreed, well as the Eurasian Economic Com- MEPs seek P&B food contact rules 5 resulting in a clear negative impact on mission, a body of the Eurasian Eco- European paper product exports. nomic Union which Russia formed Ukraine, EU spar over wood exports 10 In its current report, the WTO con- with Belarus, Kazakhstan, Kyrgystan firmed that the import duties for certain and Armenia. PRICE WATCH: Germany Euro/tonne (unless otherwise noted). Graphic paper and packaging paper prices as well as prices for paper for recycling are free delivered, buyer’s facility. Most recent prices Year-to-year Oct. 2016 Sept. 2016 Aug. 2016 Oct. 2015 % chg. GRAPHIC PAPER Newsprint 48.8-g 1 410 - 430 410 - 430 410 - 430 395 - 415 3.7% 45-g 425 - 445 425 - 445 425 - 445 410 - 430 3.6 42.5-g 2 450 - 471 450 - 471 450 - 471 434 - 455 3.6 Uncoated mechanical SC rotogravure reels, 60-g 485 - 500 485 - 500 485 - 500 490 - 510 -1.5 SC rotogravure reels, 56-g 505 - 520 505 - 520 505 - 520 510 - 530 -1.4 SC offset reels, 60-g 485 - 500 485 - 500 485 - 500 490 - 510 -1.5 SC offset reels, 56-g 505 - 520 505 - 520 505 - 520 510 - 530 -1.4 Coated mechanical Rotogravure reels, 80-g 630 - 650 630 - 650 630 - 650 625 - 655 0.0 Offset reels, 80-g 605 - 625 605 - 625 605 - 625 610 - 640 -1.6 LWC rotogravure reels, 60-g 610 - 630 610 - 630 610 - 630 605 - 635 0.0 LWC rotogravure reels, 57-g 630 - 650 630 - 650 630 - 650 625 - 655 0.0 LWC rotogravure reels, 54-g 660 - 680 660 - 680 660 - 680 655 - 685 0.0 LWC offset reels, 60-g ³ 595 - 615 595 - 615 595 - 615 600 - 630 -1.6 LWC offset reels, 57-g ³ 615 - 635 615 - 635 615 - 635 620 - 650 -1.6 LWC offset reels, 54-g ³ 645 - 665 645 - 665 645 - 665 650 - 680 -1.5 Uncoated woodfree A4 copy (B grade), 80-g 770 - 830 780 - 830 780 - 830 780 - 830 -0.6 A4 copy (C grade), 80-g 680 - 740 690 - 740 690 - 740 690 - 740 -0.7 Offset reels, 80-g 710 - 750 720 - 760 720 - 760 720 - 760 -1.4 Offset sheets, 80-g 740 - 790 750 - 790 750 - 790 750 - 790 -0.6 Coated woodfree Reels, 100-g 600 - 640 610 - 640 610 - 640 620 - 650 -2.4 Reels, 90-g 620 - 680 630 - 680 630 - 680 640 - 690 -2.3 Reels, 80-g 670 - 710 680 - 710 680 - 710 690 - 720 -2.1 Sheets, 100-g 680 - 720 690 - 720 690 - 720 710 - 750 -4.1 Sheets, 90-g 710 - 760 715 - 760 715 - 760 735 - 790 -3.6 PACKAGING P&B Virgin fiber containerboard Unbleached kraftliner, 175-g+ 585 - 595 585 - 595 585 - 595 620 - 635 -6.0 Unbleached kraftliner, 150-g 600 - 610 600 - 610 600 - 610 635 - 650 -5.8 Unbleached kraftliner, 125-g 615 - 625 615 - 625 615 - 625 650 - 665 -5.7 White-top kraftliner, 140-g+ 755 - 770 755 - 770 755 - 770 755 - 780 -0.7 Semi-chemical fluting, 127-g 4 550 - 600 550 - 600 550 - 600 560 - 610 -1.7 Recycled containerboard Testliner 2, 140-g 485 - 505* 485 - 505 485 - 505 525 - 550 -7.9 Testliner 3, 140-g 455 - 485* 455 - 485 455 - 485 495 - 530 -8.3 Fluting (Wellenstoff), 105-g 445 - 475* 445 - 475 445 - 475 485 - 520 -8.5 White-top testliner, 140-g 5 540 - 565 540 - 565 540 - 565 555 - 575 -2.2 Cartonboard Coated duplex (GC2), 270-g+ 1,065 - 1,190 1,065 - 1,190 1,065 - 1,190 1,085 - 1,190 -0.9 White-lined chipboard (GD2), 300-g+ 630 - 785 630 - 785 630 - 785 645 - 785 -1.0 PAPER FOR RECYCLING 6 1.02 - mixed P&B (sorted) 110 - 125 115 - 125 115 - 125 80 - 90 38.2 1.04 - supermarket corrugated P&B 135 - 150 140 - 150 140 - 150 110 - 120 23.9 1.04 - supermarket corrugated P&B (export)7 130 - 145 135 - 145 140 - 150 105 - 110 27.9 1.11 - sorted graphic paper for deinking 135 - 150 135 - 150 135 - 150 110 - 125 21.3 2.01 - newspapers 140 - 160 140 - 160 140 - 160 120 - 145 13.2 3.10 - multi printing 165 - 190 165 - 190 165 - 190 165 - 185 1.4 3.14 - white newsprint 195 - 240 195 - 240 195 - 240 200 - 240 -1.1 3.18.01 - white uncoated woodfree shavings 355 - 390 355 - 390 355 - 390 360 - 390 -0.7 NOTES 1. Assessment based on standard downcharge from 45-g. 2. Calculated via full-yield formula using the 45-g grade as the base price. 3. Prices quoted are before 3% rebate for cash payment within 14 days. 4. Nordic SC medium prices are reflected at the top end of the range, while other European qualities are shown at the lower end. 5. Prices are for uncoated board with a brightness of ISO≥70. 6.Paper for recycling nomencla- ture comes from the list of standard European qualities developed by CEPI and BIR. 7. Free alongside ship (FAS), destination main-port Asia. * Sources reported that spot prices have dropped by Euro 5-10/tonne in October. DISCLAIMER While the information contained in this report has been obtained from sources believed to be reliable, RISI does not warrant or guarantee the accuracy and completeness of the information. All prices are best estimates of prices, and are composite prices as opposed to median or average prices. Actual transaction prices may vary.

2 © 2016 RISI, Inc. All rights reserved. PPI EUROPE/October 13, 2016 Spain’s Sniace rises again, restarts production UPM Raflatac to invest in new coating line in Poland Following three years of inactivity due Sniace was declared bankrupt in Octo- to financial difficulties, the Spanish spe- ber 2013. The group used to produce some UPM Raflatac has unveiled plans to in- cialty cellulose and viscose group Sniace 66,000 tonnes/yr of RCF soluble cellulose vest in its label stock factory in Wroclaw, is in the process of revamping pulp and pulp, 126,000 tonnes/yr of lignin sulphate Poland. The firm said it will spend some energy production. and 26,000 tonne/yr of viscose fiber. Euro 35 million ($39 million) to build a “After obtaining all necessary admin- Due to the extra costs caused by new coating line at the facility while also istrative permits necessary for the restart the Bill on Fiscal Measures for Energy boosting its slitting capacity in order to of production activities, the completion Sustainability in Spain that came into meet rising demand for self-adhesive la- of all maintenance work required for the force in early 2013, Sniace’s viscose pro- bel stock in Europe. commissioning of production facilities duction was shut down in mid-January of The firm attributed the decision in part after three years of inactivity, staff train- the same year. At the same time, specialty to the increase in online shopping. “One ing, test runs in the cogeneration plant and cellulose output was reduced by 30% be- of the trends driving label stock demand the closing of contracts for the supply of fore it came to a complete standstill in is the fast growth of e-commerce, an end- various raw materials, we today initiated early July 2013. use requiring increasing amounts of label- the startup process in the pulp and energy In a statement filed with Spain’s Na- ing material,” the firm said in a statement. facilities at the group’s site in Torrelavega, tional Securities Commission CNMV two The company added that packaged food Cantabria,” Sniace said in a statement on months later, Sniace said that its board trends and the general growth in private Monday evening. The startup preparations of directors had decided that it was not consumption were also fueling demand. reportedly were initiated more than two possible to reach an agreement regarding Work is slated to begin in Q4 this year months ago. the future of the firm or find new finan- according to a company representative, Last weekend, some 60 employees re- cial support. On October 25, 2013 Sniace with production on the new line expected to turned to the Torrelavega site. Once pro- and its subsidiaries Viscocel and Celltech start in the first half of 2018. Once complet- duction is up and running at 100%, the site were declared bankrupt with retroactive ed, the expansion will create approximately is expected to employ some 180 people. effect from September 6. 50 new positions at the facility, she added. The label stock plant in Wroclaw began operating in 2008, and the firm launched Lenzing invests to boost dissolving pulp output more production at its nearby Nowa Wies factory in 2012. The Lenzing Group unveiled plans this pulp, while the Paskov mill can produce week to invest Euro 100 million ($111 mil- some 270,000 tonnes/yr. CEPI reiterates call for PfR lion) to expand and modernize its dissolving The latest investment plans are part of wood pulp production at its sites in Lenz- the firm’s strategy to increase its own dis- recycling in Europe ing, Austria and Paskov, Czech Republic. solving pulp production from the current The Confederation of European Paper The firm said that approximately Euro level of meeting 56% of the group’s needs Industries (CEPI) has once again voiced its 60 million would go for upgrades at the for the production of botanic cellulose fibers concern over rising exports of paper for re- Lenzing site, while nearly Euro 40 million to 75% by the end of the decade, Lenzing cycling (PfR) to regions outside of Europe. would be spent on the Paskov facility, lift- CEO Stefan Doboczky said in a statement. “Market data has shed light on the ing overall dissolving pulp capacity at the This week’s announcement comes on creeping trend to export paper for recy- two sites by approximately 35,000 tonnes/yr the heels of another investment initiative cling outside of Europe rather than ef- over the next 2.5 years. outlined by the firm in August. Those plans fectively recycling it in Europe in a sus- Work on the project will begin now and involve a capacity expansion for specialty tainable manner,” the industry body said be carried out in phases, with completion fibers of some 35,000 tonnes/yr by mid- in a statement. According to CEPI, PfR scheduled for 2019, a company representa- 2018, via a Euro 70 million investment in exports from member countries rose by tive told PPI Europe. its Heiligenkreuz/Burgenland plant and a 7.1% or some 679,000 tonnes year on The Lenzing mill currently has a capac- Euro 30 million injection into its Lenzing/ year in 2015. The confederation called ity of some 297,000 tonnes/yr of dissolving Upper Austria plant. this “a worrying development if not put in reverse,” adding that annually around 10 million tonnes of PfR leave Europe. BillerudKorsnӓs set to start up new CTMP line According to CEPI, it has been esti- mated that keeping this material stream Billerudkorsnӓs is in the final phase of mar plant will increase from the current in Europe to feed the domestic industry preparations to launch its new chemith- 90,000 tonnes/yr to 150,000 tonnes/yr. could create up to 140,000 jobs. The in- ermomechanical pulp (CTMP) line at its At the Frövi mill, the firm is carrying dustry body added that the increasing PfR Rockhammar mill in Sweden. A compa- out a revamp of its KM 5 which involves exports present a clear gap in Europe’s ny representative told PPI Europe that it a number of debottlenecking projects. circular economy ambitions. plans to start up the line and carry out test These upgrades are being done in steps “This shows that effective regulation runs from October 24. during annual maintenance shutdowns, is needed to ensure recycling is done both The new line is part of a SEK 900 mil- the firm said earlier, and will be complet- inside and outside Europe at equivalent lion ($104.5 million) investment proj- ed during 2017. environmental standards and that we ef- ect announced by Billerudkorsnӓs for Once finished, KM 5’s production ca- fectively measure what is recycled in Eu- its Rockhammar and Frövi mills back in pacity will rise from 430,000 tonnes/yr rope and avoid encouraging alternative summer 2014. As a result of the invest- to 550,000 tonnes/yr of cartonboard and means for meeting objectives under the ment, CTMP production at the Rockham- liquid packaging board. circular economy package,” CEPI noted.

PPI EUROPE/October 13, 2016 © 2016 RISI, Inc. All rights reserved. 3 Mondi inks deal to acquire Russia’s Beepack Gascogne hikes unbleached MG and sack kraft paper Mondi has signed an agreement to ac- eastern Europe. It enables us to enter a quire 100% of the outstanding share capi- market with strong growth potential while Gascogne Papier has unveiled plans to tal of the Russian corrugated packaging expanding our geographic reach to better increase its prices for unbleached machine- firm Beepack from a private investor for serve our customers,” Mondi CEO David glazed (MG) and sack kraft paper grades Rouble 2,825 million ($45 million) on a Hathorn said in a statement. by Euro 40/tonne ($44/tonne) globally. debt and cash free basis. The deal remains subject to custom- The firm ascribed the hike, which is Beepack operates a plant in Lebedyan ary closing conditions. It is expected to be effective “between now and January 1, in the Lipetsk region of western Russia, completed in Q4 2016. 2017,” to “several years of substantial which produces corrugated packaging Rumors concerning interest on the part wood price increases,” and continued trays and boxes for food and agricultural of Mondi as well as three or four other strong demand, especially for MG papers. products including beverages, fruit and Russian market players in acquiring Bee- vegetables, poultry and dairy. In 2015, pack have been circulating since June. Idempapers set to increase Beepack generated revenues of Rouble Beepack will be Mondi’s first corrugated 2,782 million and adjusted EBITDA of packaging asset in Russia. So far, the carbonless paper prices Rouble 462 million. group has acted in that market as a non- The Belgium-based specialty paper “The acquisition of Beepack supports integrated supplier of white-top kraftliner manufacturer Idempapers has set its sights the ongoing development of our corru- which is produced at Mondi’s Syktyvkar on higher prices for its carbonless prod- gated packaging business in central and mill in the Republic of Komi. ucts in sheets in the UK. The company said it is seeking hikes of up to 5% from November 14. Ittihad invests in new UWF PM, mulls new tissue PM “Despite the price increases already implemented during the past few months, Abu Dhabi’s Ittihad International Invest- The project under consideration would add the volatile UK currency has impacted our ments will start construction of a 325,000 a third tissue PM with a width of 5.6 meters margins, and we are forced to implement a tonne/yr uncoated woodfree (UWF) paper and capacity of 65,000 tonnes/yr further price correction,” Idempapers said machine at its Ittihad Paper Mill in Novem- The Crown mill currently operates two in a statement. The company added that ber. The 7.5 meter wide machine – the first PMs with a combined capacity of 30,000 today’s euro/pound exchange rate is more one to be installed at the site – will be up tonnes/yr. The company said it is already in than 20% lower than it was a year ago. and running towards the end of 2018. talks with two machinery suppliers for the “The area has capacity for two machines construction of the third production line. Hungary’s largest daily but we are starting with one,” a source at the Ittihad International Investment, the par- company revealed, adding that Ittihad is in ent firm of both mills, manages a portfolio newspaper shuts down the final stages of selecting suppliers. of manufacturing companies active in the Hungary’s main opposition and biggest The firm is also mulling a further invest- cement, chemicals and building materials daily newspaper Népszabadság was shut ment at its Crown Paper Mill in Abu Dhabi. as well as paper sectors. down suddenly on Saturday, allegedly for financial reasons. According to a statement by the news- Production still down at Natron Hayat’s Maglaj mill paper’s publisher Mediaworks, consultations will be started in order to find the Production of sack kraft paper at Bos- Work is currently being done to rebuild best business model for the paper. “All op- nian kraft paper and containerboard maker the critical equipment of the firebox section. erations of Népszabadság (including print Natron Hayat’s Maglaj mill in Bosnia is The mill is still producing machine- and online) will as of [October 8] be sus- still down following the explosion that hit glazed (MG) paper on its PM 3 and packag- pended until the new form is decided and the plant in July. Sack kraft paper producing paper on its PM 1, as the firm is buying can be implemented,” the statement said. tion on PM 4 is expected to resume around the pulp it needs from an external producer, Journalists at the newspaper and the op- mid-January, the firm’s management told according to company management. position Hungarian Socialist Party claim PPI Europe. Natron Hayat’s Maglaj mill manufac- the closure of the daily was not due to The mill’s recovery boiler was hit by an tures approximately 155,500 tonnes/yr of financial problems but rather to pressure explosion on the morning of July 26. One kraft papers and recycled containerboard on from Prime Minister Viktor Orban, the worker was killed and five were injured. three machines. BBC reported. Népszabadság had opposed a recent referendum on refugees and often criticized the Hungarian government. Palm’s King’s Lynn newsprint mill hit by fire The Hungarian government rejected the “coup” accusations and said in a state- Palm Paper’s newsprint mill in King’s bales were on fire.” It was unclear wheth- ment that “the government would in no Lynn in the UK was hit by a fire on Friday er paper production and supply at the mill way like to infringe on the freedom of the afternoon. According to the BBC, “more had been affected. press by becoming involved in the pub- than 100 firefighters tackled a blaze that The facility is said to be the biggest lisher’s decision.” started in a stack of compacted paper newsprint mill in the world and has a ca- Mediaworks, owned by Vienna Capi- bales.” pacity of 450,000 tonnes/yr. tal Partners, said the newspaper “has lost The British media reported that one Palm Paper, a subsidiary of Germany’s 74% of its sold circulation in the past person was treated at the scene for smoke Papierfabrik Palm, declined to comment 10 years, corresponding to more than inhalation and that “three or four paper on the situation. 100,000 copies.”

4 © 2016 RISI, Inc. All rights reserved. PPI EUROPE/October 13, 2016 MEPs call for P&B food contact measures BillerudKorsnäs takes minority stake in Kezzler At the initiative of rapporteur Christel economy should be developed, which Schaldemose, members of the European should include specific measures at the Sweden’s BillerudKorsnäs Venture, Parliament (MEPs) voted a non-binding EU level for recycled paper and board,” a wholly-owned subsidiary of Billerud- motion for a resolution on the imple- the motion states, adding that there is a Korsnäs, has invested in a minority stake mentation of the Food Contact Materials limit to the number of times that recycled in Norwegian serialization and track and (FCMs) Regulation (EC) No. 1935/2004 paper and board products may be reused, trace specialist Kezzler. during a plenary session on October 6. thus “requiring a steady supply of fresh The value of the deal was not disclosed. In the resolution, the MEPs acknowl- wood fibers.” The investment is part of Billerud- edge that the Framework Regulation con- The MEPs recommend further re- Korsnäs’ strategy to develop new packag- stitutes a solid basis, but highlight the fact search aimed at preventing migration into ing-related solutions in collaboration with that of the 17 EU-listed food contact ma- foodstuffs, “given the risk of migration of early-stage companies along the packag- terials in its Annex I, only four of them mineral oils into food from food contact ing value chain. are FCMs covered by specific EU mea- materials and articles made of paper and “The new capital will be used to scale sures: plastics, ceramics, regenerated cel- board […], pending the adoption of spe- Kezzler’s organization in the United lulose and active and intelligent materials. cific measures and a possible ban on min- States, Europe and Asia. As part of the Non-harmonized areas of FCMs can rep- eral oils in inks.” investment, Anders Persson, managing resent a risk to public health triggering In addition, the motion highlights the director of BillerudKorsnäs Venture, will legal uncertainty and hampering com- need to urgently tackle “current short- join Kezzler’s board of directors,” Kez- petitiveness and innovation, MEPs said, comings in the implementation and en- zler said in a statement. adding that the focus should be put on the forcement of the legislation in place. In “Digitalized packaging, also referred to 13 remaining FCMs not yet regulated at this respect, the focus should be on four as ‘The internet of packaging,’ is one of the the EU level, and especially paper and major areas: risk assessment, traceability areas that the business is focusing on and board (P&B). as well as enforcement and controls of the investment in Kezzler is a first impor- “Given the prevalence of the materials compliance.” tant step in this direction,” BillerudKorsnäs referred to on the EU market and the risk To that effect, the parliament called said in a separate statement. they pose to human health, and in order for the EC to secure the European Food Kezzler specializes in digital mass en- to preserve the single market for FCMs Safety Authority’s activities by raising its cryption for secure product identification and food products alike, the Commission funding level and promoting the scientific and traceability in the supply chain. The should forthwith prioritize the drawing- research into non-intentionally added sub- company has developed a serialization al- up of specific EU measures for paper and stances (NIAS). gorithm for a unique encrypted code, which board, varnishes and coatings, metals and Industry associations applaud: In a is applied to individual packaging units and alloys, printing inks and adhesives,” the joint press release the Confederation of can be scanned using a smartphone. text says, adding: “Special attention needs European Paper Industries (CEPI), the to be paid to those food contact materials International Confederation of Paper and Emin Leydier upgrades PM – whether directly or indirectly in contact Board Converters (CITPA) and the Eu- at its Champblain mill with food – with a higher risk of migra- ropean Federation of Corrugated Board tion, such as materials surrounding liquids Manufacturers (FEFCO) welcomed the The French recycled containerboard and high-fat foods, and to materials that resolution. producer Emin Leydier stopped produc- are in contact with food for a long period According to the industry associations, tion for 10 days starting in week 33 at of time.” a well-functioning internal market is key its Champblain mill in order to upgrade Regarding recycled FCMs, the MEPs for the P&B sector, its customers and the mill’s PM 5. The value of the project stress that the use of FCMs made from consumers. “In the absence of common amounted to approximately 1.5 million recycled products and the reuse of FCMs EU rules, diverging national measures ($1.7 million), the firm said. should not lead to a higher number of are now seriously hampering the internal According to the firm, the upgrade aims contaminants and/or residues in the fi- market,” the associations said in the joint to reduce risks during interventions on the nal product. “In light of the EU’s focus statement, adding: “These inconsistencies PM, improve its performance and reduce on moving towards a circular economy, have created legal uncertainty and risks the risk of fire. Among others, the firm in- better synergies between the Framework for the entire value chain, and hinder con- stalled wet end technology from Valmet. Regulation on FCMs and the circular sumers’ confidence in food safety.” The Champblain mill houses PM 5 and PM 6, with a production capacity of approximately 150,000 tonnes/yr and Crane to open new banknote plant in Malta by 2018 320,000 tonnes/yr, respectively, of recycled containerboard. Eying global growth, Crane Currency, a modern printing facility, a banknote pa- which has made US currency paper since per mill and a design services team, and 1879, plans to spend about $100 million from its security technologies operations At a Glance on building a new 140,000 ft² banknote in New Hampshire and Georgia. printing facility and customer experience “Malta has a business-friendly environ- Finland’s Huhtamaki has relocated its center on the island of Malta. The plant is ment and is located in close proximity to head office to new premises located at to be opened in early 2018. many of Crane’s customers. Crane Currency Revontulenkuja 1 in Espoo. The move Crane Currency currently supports its Malta will be the first commercial banknote was effective as of September 26. Some international customers from its opera- printing facility to be built in several de- 80 people work in the firm’s head office. tions in Tumba, Sweden, which include cades,” Crane Currency said in a statement.

››› continued from page 1 from Eurostat, national construction mar- remained highly competitive. “Egypt, kets, especially in southern Europe, have which used to be the biggest market in Unbleached sack kraft paper mills re- improved slightly, even though the pickup north Africa, is suffering from a lack of port lead times of three to four weeks, with is from a low level, most sources said. hard currency,” a producer said. Specula- some suppliers mentioning lead times of Construction output increased by 3.1% tion is rife that Egypt’s central bank could up to six weeks. Some others even talked year on year in July in the euro area and devalue the pound any day to close the of turning away new business for Q4, say- by 1.0% in the EU28. Among member gap with the black market rate. ing that their order books are full until the states, the biggest increases in production “Some new orders in the Middle East end of the year. “The market demand is were recorded Spain (+12.0%), Sweden were agreed for A-grade qualities at a rel- unusually strong for this time of year. Tra- (+10.0%) and France (+3.3%), while the atively higher price compared to previous ditionally in October, things start to slow largest decreases were observed in Slova- agreements,” said a European producer. down a bit, but it is not the case yet,” said kia (-23.3%), Hungary (-17.6%) and Po- Contacts also reported higher offers for a producer, noting that underlying demand land (-15.1%). B-grades qualities but they did not exceed is better compared to last year at the same Contacts expect that European demand, $700/tonne, especially in the Middle East. period, at least on the converting side. “It especially from the construction industry, A source said that low offers averaging is not a dramatic improvement but it’s not is likely to ebb, as the winter sets in and the $650-660/tonne in south Asia, the Middle too bad. The question is how long will this traditional slow demand period starts. East and Africa remained common. situation last?” he wondered. Upward global price trend: Euro- A buyer in the Middle East, however, There was a broad consensus, however, pean suppliers’ request for an increase is said he expected his Q4 prices to re- that demand in Europe has not seen any in line with a global price increase trend main largely stable compared to Q3, as massive improvements of late. Some con- on the export market, with producers ask- he would refuse any price hike for the verters said that one of the main reasons for ing for a $50-60/tonne markup on aver- time being: “I can get unbleached exten- mills’ good order books is the price increase age for export volumes, depending on the sible sack kraft paper at around $680-685/ announcement. “Converters are currently baseline. Among others, North American tonne, while the semi-extensible quality stocking paper in anticipation [of a price leader KapStone has informed customers can be obtained at around $660/tonne. The hike] and will reduce their orders in Q1 next of a “minimum” $60/tonne price increase average selling price for bleached exten- year. The risk is that every supplier is trying on all unbleached export kraft paper sible sack kraft paper was approximately to get an increase now, but there might be an grades effective with new orders. Brazil’s $890-900/tonne.” erosion later because we will be in the weak Klabin has also unveiled an 8.5% increase Consolidation, volume shifts ahead: season and buyers will have enough stocks on sack kraft paper prices as of October 1, Sources credited this improving situation and inventories,” said a source. both on domestic and export markets. in the export market to anticipated con- Some annual maintenance-related The European unbleached sack kraft solidation on the unbleached side in the shutdown at mills as well as Natron Hay- market is still mostly driven by demand coming weeks. The announcement of the at’s downtime have also tightened up sup- from overseas, where demand has report- planned closure of Tolko Industries’ mill ply and improved suppliers’ order books. edly improved in recent months. While in The Pas, Canada, on December 2 was Sack kraft production is still down at the most negotiations are just starting, a few considered a game changer and one of the Bosnian mill following the recovery boil- European producers said that they have al- driving forces behind the upward trend at er explosion at the plant in July. The mill ready been successfully implementing price the moment. is expected to resume production around increases for their overseas customers. The main effect of the mill’s potential mid-January next year and has started ac- Generally speaking, demand was shutdown is a shift of volumes and a com- cepting orders for Q1 (see article on p.4). healthier and price levels improved in plete change to the whole supply pattern on “Natron Hayat’s stoppage had a limited Q3, sources said, even though from a low the export market, as the firm exports a large impact on the underlying state of demand, level. “The main difference is overseas. amount of its output outside the US. As a as only 40,000-50,000 tonnes are being Last year was not a good year for cement result, KapStone and Canfor stand to be- taken out of the market, which is rather demand globally. We passed a low mark come the main beneficiaries of the closure limited,” said a manufacturer. in H2 2015 but it’s been picking up since, and could decide to bring back their export On the converting side, most sources especially in southeast Asia,” said a large volumes in order to concentrate their activi- confirmed rather satisfying order books producer. ties on a more attractive – profit-wise – do- in Q3, even those exposed to the building Middle East and northern African mar- mestic market, contacts said. “What Tolko industry. According to the latest figures kets were also reportedly healthier, but is leaving is what Kapstone/Longview is basically selling overseas,” a large convert- ANNOUNCED UNBLEACHED SACK KRAFT PAPER er said. European producers could also be PRICE INCREASES IN EUROPE induced to increase their exports to the US. “Overseas, things started to change to- Company Amount Date tally after [the announcement of the Tolko BillerudKorsnäs Euro 80/tonne All deliveries as of October 1 shut] this summer. We saw movements; Segezha Euro 50/tonne All new orders and shipments from October 1 it’s not like this is a booming market or Mondi Euro 60/tonne All deliveries in Europe as of October 15. that there is more demand, but some vol- The firm will raise its prices by 8-12% for all umes were taken out of the [export] mar- new orders with immediate effect. ket,” said a European producer, adding: Nordic Paper Euro 60/tonne All deliveries as of November 1 “Customers are looking at how to replace Gascogne Euro 40/tonne Effective between now and Jan 1, 2017 ››› continued on page 7

6 © 2016 RISI, Inc. All rights reserved. PPI EUROPE/October 13, 2016 Planned closure of Tolko sack kraft mill scrambles global market situation ››› continued from page 6 cated last week that a New York private ments is giving them enough time to inte- equity firm, American Industrial Acquisi- grate the hike into their raw material bud- the stocks they used to have with Tolko, so tion Corp. (AIAC), had signed a letter of gets and tenders for 2017 and pass it on we are receiving new requests. Buyers are intent with Tolko Industries to acquire the to their own customers, they said. Those looking for options.” firm’s 188,000 ton/yr unbleached kraft pa- price discussions have not even started Another contact on the production side per mill. According to PPI Europe’s sister in the majority of cases. “The problem in reported more requests for high porosity publication, PPI Pulp and Paper Week, at the converting market is the high degree paper from Tolko’s customers in Central least one other private equity firm with in- of competition. There is always a smart and South America, as well as French- terests in the paper industry is also said to alec who prefers to swallow the increase speaking countries in western Africa. be looking at the mill. instead of passing it on to his customers,” The consequences of the Tolko shut- Most contacts were, however, skepti- said a converter, echoing a traditional down will also be felt in China, where the cal about the continuation of operations at market concern over the price strategy of authorities decided to impose five-year the mill, even with a new owner, as the some integrated players. anti-dumping duties on unbleached sack announced closure was due to continuing Steady bleached market: The bleached kraft paper imports from the European operating losses despite long-term efforts sack kraft paper market followed a quiet Union, Japan, and the US. With Tolko to lower the mill’s production costs. “If path in Q3, with demand at mills consid- gone, Segezha would retain the lion’s the reason for the closure is low perfor- ered satisfactory, according to suppliers. share in China, and with it the possibility mance over recent years because of higher Lead times averaged four to six weeks. to apply high prices, sources said. input costs and a bad logistics situation, Prices were mainly stable and they are “The deliveries of a central American it is not going to change if a new buyer expected to remain unchanged in the near customer of Segezha’s are being delayed shows up,” a source said. future, as most price agreements are valid by two months,” said a source, speculat- Converters primed to pass on hikes: until the end of the year. ing on the possibility that the Russian The situation is obviously not to the liking Price-wise, a couple of converters said company is already, taking a stricter ap- of European converters. They did not real- they received a Euro 30/tonne increase for proach in its export markets. ly understand the timing and amount of the Q4 from one of their suppliers. “The underlying bag and therefore increase announcements, arguing that they Complex UK market: While specula- paper demand has not changed overseas, are not necessarily justified by the current tion is still rife on the longer-term impact of it’s just that volumes have shifted,” a con- state of demand. Mills’ order books have the Brexit vote on the market, the currency verter said. Another source added that, not improved massively and are actually issues in the form of the weakening pound if Tolko stops production permanently, expected to see seasonal deterioration dur- and its effect on price negotiations contin- Segezha will, in any case, fill the gap with ing the winter. Producers said nonetheless ued to cause headaches for most producers. its new 110,000 tonne/yr unbleached sack that buyers were fatalists, with many ex- According to sources, suppliers kraft machine, which is expected to be up pecting there will be little choice in terms are generally pushing for an increase and running by June 2017. of accepting the next increase. News-wise, a CBC News report indi- However, the timing of the announce- ››› continued on page 8 QUARTERLY PRICE WATCH: Sack Kraft Paper Euro/tonne (unless otherwise noted). Free delivered, buyer’s facility. Retroactive price development Year-to-year Oct. 2016 Sept. 2016 Aug. 2016 July 2016 Oct. 2015 % chg.

80-g+ Bleached France 1,030 - 1,080 1,030 - 1,080 1,030 - 1,080 1,030 - 1,080 1,060 - 1,080 -1.4 Germany 1,030 - 1,080 1,030 - 1,080 1,030 - 1,080 1,030 - 1,080 1,060 - 1,080 -1.4 Italy 990 - 1,080 990 - 1,080 990 - 1,080 990 - 1,080 1,020 - 1,080 -1.4 Spain 970 - 1,035 970 - 1,035 970 - 1,035 970 - 1,035 1,000 - 1,035 -1.5 United Kingdom £820 - 865 £820 - 865 £820 - 865 £820 - 865 £830 - 865 -0.6 80-g+ Unbleached France 760 - 860 760 - 860 760 - 860 760 - 860 810 - 890 -4.7 Germany 795 - 870 795 - 870 795 - 870 795 - 870 845 - 900 -4.6 Italy 755 - 860 755 - 860 755 - 860 755 - 860 805 - 890 -4.7 Spain 745 - 860 745 - 860 745 - 860 745 - 860 795 - 890 -4.7 United Kingdom £735 - 790 £735 - 790 £735 - 790 £735 - 790 £745 - 790 -0.7 NOTES Sack Kraft prices are reported on a quarterly basis and reflect the price for the first month of a given quarter. Prices listed for the other two months of a given quarter represent any interim price development in the course of the given quarter which may have occurred and are added retroac- tively. Prices are for the semi-extensible quality with a Gurley air resistance value of 3-10.

DISCLAIMER While the information contained in this report has been obtained from sources believed to be reliable, RISI does not warrant or guarantee the accuracy and completeness of the information. All prices are best estimates of prices, and are composite prices as opposed to median or average prices. Actual transaction prices may vary.

››› continued from page 7 Price discussions are ongoing in the next year, mainly due to price agreement majority of cases. So far, only a few buy- validities which run until the end of the on brown sack kraft paper of about ers said they had closed their negotiations year for the majority of volumes. “I have £40-50/tonne and, in some cases, on with an increase applied already in Q4. a hard time believing that any hike will be white of about £20-30/tonne. Whether or “Sellers asked for £40/tonne but we ne- effective before January next year, with not this succeeds remains to be seen. “I gotiated a £30/tonne markup for deliver- the exception of those who have very low have not agreed any increases with any ies from October,” said a UK converter, price levels,” said a producer. of our suppliers. I am sure that there will adding: “I am sure suppliers will be It is still early in terms of predicting be some very tough negotiating during back with another increase because the anything regarding the expected amount the next couple of months,” said a large exchange rate has gotten worse since of the hike and, in any case, the success of converter. [our discussions]. When we got the its implementation will be determined by On top of their increase requests, many notification of the increase, the pound the supply and demand balance at the start sources expect mills to apply an extra was about 1.20 to the euro and they said of next year. Many producers are nonethe- amount for pound-denominated deals in that if it worsened they would have to less quite optimistic on the outcome of ne- order to compensate for the currency loss. come back with another £10-15/tonne gotiations, saying that an agreement could The pound has slid significantly against increase.” be reached with an average Euro 40-50/ the euro since June, and now stands at Price stability expected in Q4: While tonne markup in January. 1.10 to the common currency, compared some price negotiations on the unbleached On the bleached side, manufacturers to 1.31 in late May. “Suppliers are talk- price hike are ongoing, some others will are reportedly adopting a wait and see at- ing about a need [to restore] profitability, not start before the end of this month or titude, keeping a close eye on the outcome they are not mentioning currency consid- the start of the next. Time-wise, expec- of negotiations on the unbleached side. A erations, but it has to be linked to that, of tations among sources were low that an price hike is not ruled out at the start of course,” said a contact. increase will be implemented before Q1 next year, sources said.

UNBLEACHED SACK KRAFT 80 G

Euro/tonne 1100

1050 France Germany Italy UK 1000 Spain

950

900

850

800

750 Q3- Q1- Q3- Q1- Q3- Q1- Q3- Q1- Q3- Q1- Q3- 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016

Prices are based on average monthly values.

Van Genechten unveils expansion plan for its VG Polska packaging site Van Genechten Packaging has invested ity as well as improve the plant’s energy VG Polska will also acquire some land some Euro 7 million ($7.8 million) over efficiency and safety program. According near the Chelmek factory in order to build the last 18 months in order to expand its to a company spokesperson, the firm in- a new industrial warehouse. The project activities at its VG Polska packaging site vested in a Bobst die-cutting machine and should be completed by the end of the year. in Chelmek in Poland. a Heidelberg gluing machine. “In the first In total, the company has invested Euro The project includes the acquisition of place, this improves efficiency. Secondly, 18 million in the site since 2008. The plant new machinery in order to upgrade and the total capacity in die-cutting and finish- has a converting capacity of approximate- increase the facility’s production capac- ing increased by about 10%,” she said. ly 82 million sheets of board per year.

PIX RECOVERED PAPER INDEXES GERMANY PIX RECOVERED PAPER INDEXES GERMANY

FOEX Indexes Ltd - PIX Recovered Paper Indexes – October 11, 2016 FOEX Indexes Ltd - PIX Recovered Paper Indexes – October 11, 2016

Grade Index value Change Confidence interval

PIX RCP Mixed 1.02 GER Mixed papers and board (sorted) 134.06 +2.41 132.46 - 135.66 PIX OCC 1.04 GER 146.31 +1.57 145.15 - 147.47 Supermarket corrugated paper & board PIX ONP/OMG 1.11 GER 156.59 +2.72 154.49 - 158.69 Sorted graphic paper for deinking

Euro/Tonne PIX Recovered Paper Indices Germany 165 PIX launch Nov. 10, 2015 155

145

135

125

115

105 PIX 1.11 dd GER PIX 1.04 dd GER 95 PIX 1.02 dd GER 85 July 2013 July 2014 July 2015 July 2016 May 2013 May 2014 May 2015 May 2016 Jan. 2013 Jan. 2014 Jan. 2015 Jan. 2016 Mar. 2013 Mar. 2014 Mar. 2015 Mar. 2016 Nov. 2013 Nov. 2014 Nov. 2015 Sept. 2013 Sept. 2014 Sept. 2015 Sept. 2016

Please note that the PIX indexes are trademark registered, worldwide, by FOEX Indexes Ltd. Using the PIX indexes commercially is subject to approval by FOEX Indexes Ltd, the owner of the PIX index trademark.

Recovered paper Germany – Following the hefty August hikes, the German recovered paper market calmed down in September, and prices for sorted mixed papers and board (1.02), supermarket corrugated paper and board (1.04) and sorted graphic paper for deinking (1.11) started to level out.

Several paper mills had set their sights on lower PfR prices, but although collection volumes started to return to normal levels and export demand weakened, supply and demand were pretty balanced, and in most cases August prices were carried over into the following month. However, a change in trend might be on the cards soon, as several mill buyers said they will push for lower prices once full collection volumes are available again in October.

“Export prices are dropping and the available volumes are rising. Where should prices go if not down?” one market insider said, and others shared this view. “Given the current market fundamentals, I’m confident that prices will go down in October,” one of them commented. So far, prices for 1.02 and 1.04 have risen by more than Euro 20/tonne this year, while levels for 1.11 have climbed by some Euro 16.50/tonne. The next edition of PIX Recovered Paper Indexes Germany will be published on November 8, 2016.

(Sources: PIX Indexes, index development: FOEX Indexes; Market commentary: RISI.) ______Receive your own copy,______send an email to info@foex.ﬁ Contact: Tytti Inkinen, Senioror Managervisit www.foex.ﬁ, FOEX; [email protected] /de; +358.9.4391.0323; www.foex.fi UPM’s Hürth newsprint mill Ukraine, EU lock horns over wood export ban hit by minor fire Ukraine and the European Union (EU) Ukraine might lift the ban. Whereas the UPM’s Hürth newsprint mill in Ger- have not yet found common ground on the Ukrainian Ministry for Economic Devel- many suffered a minor fire last Friday Ukrainian roundwood export ban which opment and Trade says that the ban is not with no production losses. The fire struck Ukraine put in place last November. This the right measure to conserve forest re- the bale dewiring area in the roller cutting week, the head of the EU Delegation to sources and develop the country’s wood- press hall of the mill. Ukraine Ambassador Hugues Mingarelli processing sector, the Ukrainian parlia- A spokesperson at UPM told PPI Eu- urged Ukrainian authorities to lift the ban. ment Verkhovna Rada (VR) argues that the rope that no people were injured and that Earlier, at the end of September, Euro- initial results of the ban prove that keeping there was no effect on production. “There pean Trade Commissioner Cecilia Malm- the embargo in place is crucial. were some minor technical issues when ström told a press conference during her “Now that Ukraine is sustaining mili- restarting the RCP [recovered paper] ma- visit to Kyiv that the wood export em- tary aggression against it, we have not chines, but no damage was caused [to bargo hinders free trade and goes against only legal, diplomatic or economic but them] by the smoldering fire.” Ukraine’s international commitments. also moral grounds for implementing such UMP’s Hürth newsprint mill has a ca- “We discussed these issues [with Depu- measures which allow us to protect our for- pacity of 300,000 tonnes/yr. ty Prime Minister Ivanna Klympush-Tsint- ests, employment, and the remainder of our sadze] and a way forward here. We hope industry,” the head of the VR’s Committee that we will find a solution because this is on Industrial Policy and Entrepreneurship in contradiction to the [EU-Ukraine Deep MP Viktor Halasyuk said during a round- At a Glance and Comprehensive Free Trade Area] table on September 22. Halasyuk said that DCFTA and also the WTO rules,” Malm- following the introduction of the ban, reve- The Spanish association of paper and ström said. nues in the wood-processing and the furni- board recyclers Repacar has a new The ban on the export of roundwood is ture segments grew by 15% and 12%, year director general. Manuel Domínguez valid in Ukraine for a 10-year period. It ap- on year, respectively, in H1 2016. Over the has recently been appoint- Domínguez plies to the export of all wood types except same period, exports of wood-processed ed to the position, replacing Christina Afán de Ribera who has held the posi- pine from November 1, 2015. Exports of goods increased 12%, Halasyuk said. tion for the past seven years. Domínguez pine are expected to be banned from Janu- According to the VR’s deputy speaker Domínguez was her adjunct for the past ary 1, 2017. The measure is aimed at de- Oksana Syroid, prior to lifting the ban, six years. “Manuel brings more than 12 veloping the wood processing industry in Ukraine needs to set up a system to moni- years of work experience in different ar- Ukraine, creating new jobs and raising the tor logging and reforestation. eas of the waste management sector to supply of raw material for domestic firms, “The export embargo was in fact imple- the position. The experience and knowl- the government said last year. mented to combat illegal – literally brutal edge gained along with the professional The removal of the embargo is one of – logging. At that time we had no moni- Repacar team enables us to face this new the two key conditions for Ukraine to se- toring tools and there was no other way to phase with confidence and determina- cure the second tranche of the EU’s Euro save the forest,” Syroid said after a meet- tion,” Repacar said in a statement. 1.8 billion ($1.98 billion) assistance pack- ing with Malmström and Mingarelli on • • • age. It is not clear, however, when or if September 30. Södra has sold off two wholly-owned wood products subsidiaries. The firm transferred its Nordingrå Trӓ unit, which makes fences, posts, rails and wooden decorations for indoor and outdoor use, Copyright 2016 by RISI, Inc. All rights reserved. Reproduction in any form whatsoever is forbidden without express to Sweden’s Pro Unica on October 5. permission of the copyright owner. Södra Wood Föllinge, which specializes in wood flooring and paneling, was sold to Editorial Staff Steven Sachoff, Editor (market pulp)...... [email protected]; 32.2.536.0736 Rikard Eriksson, the factory’s manager, Daniela Wortmann, Deputy Editor (paper for recycling, woodfrees)...... [email protected]; 32.2.536.0737 on October 1. “Both Nordingrå Trӓ and Irina Van den Neste, Senior News Editor (containerboard)...... [email protected]; 32.2.536.0763 Södra Wood Föllinge are small business- Anne Grimbert, News Editor (cartonboard, sack kraft)...... [email protected], 32.2.536.0767 es which we believe would thrive better Andrea Venturini, Associate News Editor (mechanical papers)...... [email protected]; 32.2.536.0756 under the management of other owners given the limited synergies that exist for Editorial office us,” the president of Södra’s wood busi- RISI, 523 Avenue Louise, B-1050 Brussels, Belgium; tel 32.2.538.6040; fax 32.2.537.5626; ness area Jörgen Lindquist said. web www.risi.com • • • Subscriptions and customer service Kemira has inaugurated its upgraded Call 32.2.536.0748 (Belgium) or 866.271.8525 (U.S.); visit www.risi.com/catalog polymer production site in San Giorgio, It- (new subscriptions) or www.risi.com/contact (online customer service); email [email protected]; aly, following a Euro 30 million ($33.7 mil- fax 32.2.537.5626, or mail to PPI EUROPE, 523 Avenue Louise, B-1050 Brussels, Belgium. lion) investment, which doubled the facil- Published 48 times per year on a weekly basis. ity’s output. The project makes the plant, which is now running at full capacity, one Advertising of the largest dry and emulsion polymer PPI EUROPE accepts advertising. For information on pricing and availability, please consult www.advertise.risi.com. sites in Europe. As a result of the expansion, the firm has doubled the number of Executives employees at the site to 122. Charles Rutstein...... Chief Executive Officer Matt Graves...... Senior Vice President

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