Klabin

SAO PAULO, Sept. 25, 2019 (Press Release) -Klabin, the leading producer and exporter of packaging paper in Brazil, has officially announced its commitment to the United Nations (UN) and civil society to establish targets and goals to reduce the impacts of climate change by 2050. The company is participating in the global campaign “Business Ambition for 1.5º C – Our Only Future,” and is one of 87 companies around the world recognized for leading the path to combat climate change.

With this initiative, Klabin reaffirms its ongoing efforts and publicly undertakes to continue its actions to limit the rise in global temperature to 1.5°C, in line with what scientists believe is necessary to reduce the impacts of climate change.

“We are reinforcing Klabin’s commitment to sustainability and showing our recurring concern for climate change, one of the major challenges facing humanity. In our management, we prioritize a model of self-sufficiency and respect to the environment, which balances productivity with the least possible impact on the ecosystem, while seeking to continuously improve the performance of our businesses,” said Cristiano Teixeira, managing director of Klabin.

Klabin currently employs intensive efforts to mitigate as much as possible any impacts of its operations on the environment. Renewable resources derived from forest-based products such as biomass and black liquor account for 89.1% of the company’s energy matrix.

The company also has a positive balance of 5.1 million tons of CO2e in its carbon balance sheet, i.e. its forest base removes more CO2 from the air than what is emitted by all of its 18 manufacturing units. In the last 16 years, Klabin has already reduced 61% of its specific CO2e emissions, actively contributing to limiting global warming.

The commitment was announced at the Climate Summit organized by the UN this week in New York. The event is held in parallel with various meetings and activities of the Climate Week, also coordinated by the UN.

Sustainable Development Goals

Klabin already works in partnership with the UN to attain the necessary targets for the development of our planet. In 2016, it voluntarily adhered to the Sustainable Development Goals (SDG) established by the UN. The initiative brings together governments, civil society and the private sector around a global agenda for people, planet, peace and prosperity, setting the priorities for a prosperous future. Since then, the company has been contributing to the agenda by increasingly incorporating the SDGs into its strategic planning. The company is also a signatory to the Global Compact, an international gathering of companies in support of the UN to promote ten principles that combine fundamental values in the areas of environment, human and labor rights and combating corruption.

About Klabin

Brazil’s largest producer and exporter of packaging paper, Klabin is the country’s only company offering one-stop solutions in hardwood, softwood and fluff pulp and the leader in the corrugated board and industrial bag packaging segments. Founded in 1899, Klabin has 17 industrial units in Brazil and one in Argentina.

With its entire management guided by Sustainable Development, Klabin pursues integrated and responsible growth that combines profitability, social development and environmental commitment. Klabin has been a component of the Corporate Sustainability Index (ISE) of the São Paulo Stock Exchange (B3) since 2014. A signatory to the United Nations Global Compact and to the Brazilian Pact to Eradicate Slave Labor, Klabin seeks suppliers and business partners that share its values of ethics, transparency and respect for sustainability principles.

SAO PAULO, Aug. 22, 2019 (Press Release) -On Tuesday (16), Klabin participated in an important event organized by the Global Compact Network Brazil at the headquarters of the United Nations in New York. With the goal of debating the initiatives of Brazil’s private sector in applying the Sustainable Development Goals (SDGs), the second edition of “SDGs in Brazil – The Role of the Private Sector” gathered some 80 people, who included representatives from major companies and international organizations, sustainability experts and investors.

In addition to sponsoring the event, Klabin was responsible for leading a presentation throughout the day. The company’s Sustainability Consultant, Ivone Namikawa, talked about the importance of forests for the planet’s prosperity and its direct relationship to Klabin’s business growth, and discussed the company’s constant concern with the development of communities located near its operations. “Showing our innovative interventions in the company’s value chain to accelerate the reach of the SDGs is important for reinforcing our commitment to sustainability and for inspiring actions by others on this agenda,” said Namikawa.

In 2016, Klabin voluntarily adhered to the Sustainable Development Goals created by the United Nations. The initiative brings governments, civil society and the private sector together in a global agenda for people, the planet, peace and prosperity, setting priorities for a prosperous future. Since then, Klabin has worked to contribute to the agenda by further integrating the SDGs into the company’s strategic planning.

About Klabin

Klabin is the largest producer and exporter of paper for packaging in Brazil, its only company offering one-stop shop solutions in hardwood, softwood and fluff pulp, and the leader in corrugated board packaging and industrial bags. Founded in 1899, it has 17 industrial units in Brazil and one in Argentina.

With its entire management guided by sustainable development, Klabin pursues integrated and responsible growth that combines profitability, social development and environmental commitment. Klabin has been a component of the Corporate Sustainability Index (ISE) of the São Paulo Stock Exchange (B3) since 2014. It is a signatory to the United Nations Global Compact and to the Brazilian Pact to Eradicate Slave Labor, and seeks suppliers and business partners that share its values of ethics, transparency and respect for sustainability principles.

OAKLAND, CA, May 31, 2019 (PPI Pulp & Paper Week) -A second major kraft linerboard project with global implications was confirmed this week.

Stora Enso said it would eliminate coated printing and writing output at its Oulu mill in Finland by September 2020 and convert one machine, the No. 7, by December 2020 to making 450,000 tonnes/yr of kraft linerboard. Stora Enso said PM No. 7's new output "will target global export markets."

Klabin said similarly a month earlier, yet with a plan that is more than double Stora's capacity. Klabin plans two new kraft linerboard machines with 920,000 tonnes/yr of capacity, made partly or mostly with bleached eucalyptus kraft (BEK) pulp. The first one is to operate in second-quarter 2021 and the second one by 2023. Output is aimed for North America and Europe, Klabin said.

It's unclear how the 1.37 million tonnes/yr of capacity from these projects will impact global kraft linerboard trade flow, especially for US major integrateds like International Paper (IP), WestRock (WRK), and Georgia-Pacific (GP) that hold long-standing export positions. In all, the US sells almost five million short tons per year of kraft linerboard around the world.

Contacts this week were mixed about how these two projects may challenge the US majors and their volume. They expected most of the competition to impact lower tier producers including especially those who make recycled linerboard.

However, one expected a more direct impact on US majors in Europe and likely a smaller impact in South America.

"The Stora Enso mill in Finland will directly compete with the US mills selling in the EU (European Union) markets. This mill will be the grade of preference given its virgin fiber, quality specs, proximity to market, and Euro-denominated currency," the trader said. "This will tilt the balance with IP, WRK, GP and others currently exporting into that market, assuming the EU will be in better economic condition by the time the mill starts."

Klabin will aggressively push for business in South and Central America, where the US last year exported almost half its kraft linerboard, the trader said.

"Klabin's new capacity will also become a thorn on North America mills exporting to the Latin American markets, with the exception of Mexico, where there is limited competitive advantages for Klabin," the contact said. "Klabin will look to place the bulk of its tons in southern portion of South America (Argentina/Chile) and some to the high-volume fruit markets like Ecuador. Some (Klabin) exports will go to the European Union and Asia, although, for these markets, it will be more of the same that is currently in play."

Low-cost fiber position.Both Stora Enso and Klabin have "good assets" and "good forest access," and "both know the world will need more virgin fiber," another trader said.

The contacts expected the new output from both will be partly or largely lightweight kraft linerboard.

"Both are good companies. I think they're probably pretty strategic about what they are doing. Everyone believes that kraft linerboard will get lighter (in basis weight and thus reduce fiber in corrugated boxes)," a producer said.

But demand for lighter basis weight containerboard in the USA may not come as fast as some think, another contact, with a producer, said.

"Europe is already at overcapacity and will be for a while," the contact said. "(The new capacity) will only add to the problem. It will be extra lightweight linerboard and the North American market is not ready for it yet."

How much that lighter basis weight kraft linerboard may find homes outside the USA is unclear today.

The trader also suggested that Stora Enso's Oulu conversion will be the "first of a series of moves" into corrugated packaging, the contact said. He expected Stora Enso would buy corrugated plants for integrating some Oulu production.

He also pointed to both the companies banking on continued expansion in e-commerce and overall box demand, including in China.

Forecasters believe China -- because of its fiber crisis caused by a dramatic two-year clampdown so far on recovered paper imports -- will need to import more linerboard. RISI's packaging economist Ken Waghorne expects US kraft linerboard exports to rapidly increase in the next two years.

23% of US kraft was exported.Last year, the No. 1 country market for US kraft linerboard exports of 4.77 million short tons (4.343 million in metric tonnes) was Mexico, where 18% of the total was exported. US kraft linerboard to Mexico, and South and Central America nations represented 46% of all US exports, with a special focus on 42-lb and heavier basis weight kraft linerboard for packaging produce. China's share of US kraft linerboard exports last year was 13%, and southern Europe's was 10%. In all, 23% of US kraft linerboard production of 21 million short tons last year was exported.

Klabin Puma.Valmet is to supply both the kraft linerboard machines for Klabin. The first, with 450,000 tonnes/yr of capacity, will be the No. 27 machine as part of Klabin's Puma II mill project in southern Brazil. Startup of No. 27 is set for second-quarter 2021,PPI Latin Americareported.

Klabin also signed a letter of intent for a Valmet 470,000 tonnes/yr kraft linerboard machine, PM No. 28, for May 2021. PM No. 28 would start up by 2023, according toPPI Latin America.

Stora Enso Oulu.Stora Enso this week said it would spend about Euro 350 million to convert the No. 7.

"We have proven competence in running large conversion projects successfully, as we have already converted one paper machine at Varkaus Mill to produce kraftliner," Stora Enso CEO Karl-Henrik Sundström said in a release.

Following the conversion, Stora Enso said it expected the Oulu mill's EBITDA margin to improve by 15-20 percentage points. At full capacity, the investment is expected to meet the company's Packaging Solutions division's profitability target, which is operational return on operating capital (ROOC) of 20%, Stora Enso said.

"The investment will include a new world-class line for virgin-fiber based kraftliner (both brown and white-top) … (and) the modification of the pulp mill and drying machine for unbleached brown pulp," Stora Enso said.

Stora's project starts this summer.

 Lower pricing in China?There were more reports this week of lower pricing for June for US kraft linerboard in China. Levels reportedly were down under $700/tonne delivered to main ports in China, for the first time in nearly two years. One contact said that domestic linerboard prices in China were dropped twice in May by at least one major producer.

--bygrudder@fastmarkets.com