International Paper to Review of Strategic Options for Global Cellulose Fibers Business; Close Georgetown Pulp and Paper Mill

Oct. 31, 2024 (Press Release) - International Paper (NYSE: IP) today announced the decision to review strategic options for its global cellulose fibers (GCF) business. The decision to explore alternatives for the GCF business is consistent with the Company's strategy to focus on sustainable packaging solutions.

IP's GCF business creates safe, high-quality absorbent pulp for a wide range of applications like feminine care, incontinence and other personal care products that promote health and wellness. In addition, its specialty pulp serves as a sustainable raw material used in textiles, construction materials, paints, coatings and more. The GCF business generated $2.9B in revenue in 2023 and has operations in three countries, with eight mills and two converting facilities.

"International Paper is committed to maximizing value for our shareholders, and to that end, we have launched a comprehensive and thorough review of strategic options for our global cellulose fibers business," said International Paper Chairman and CEO Andy Silvernail.

"GCF is focused on accelerating earnings by aligning resources with our most strategic fluff pulp customers, implementing an 80/20 mindset and creating a simplified and focused portfolio. Our team is well-positioned to win with attractive customers in the growing global fluff pulp market," said Clay Ellis, Senior Vice President, Global Cellulose Fibers, International Paper. "Throughout our review, we will maintain our strong customer relationships with the same high standards and close collaboration."

International Paper has retained Morgan Stanley & Co. LLC as financial advisor to help review strategic options for the GCF business. The review of strategic options is at an early stage, and there can be no assurance that this review will result in any kind of transaction or other outcome. The Company will provide updates on the progress or status of this matter if and when it deems further disclosure is required or appropriate.

IP to Close Georgetown, South Carolina Pulp and Paper Mill

Additionally, the Company announced the permanent closure of its Georgetown, South Carolina mill. The mill will shut down in stages with a full closure expected by the end of 2024.

The Georgetown mill produces approximately 300,000 tons of fluff pulp designed for a range of consumer applications from baby diapers to incontinence products. GCF plans to retain 100% of the mill's fluff pulp capacity by transferring production to other mills and further reducing the Company's exposure to commodity pulp grades.

The mill also produces uncoated freesheet papers that it sells to Sylvamo (NYSE: SLVM) pursuant to a strategic contract, which IP and Sylvamo have mutually agreed to terminate as of December 31, 2024.

"This decision is especially difficult because of the impact on hard-working employees, their families and the surrounding communities," said Bernie Chascin, Georgetown mill manager, International Paper.

In total, 526 hourly employees and 148 salaried employees will be impacted. All employees will be offered severance benefits, outplacement services and access to mental health resources.

International Paper is a global producer of sustainable packaging, pulp and other fiber-based products, and one of the world's largest recyclers. Headquartered in Memphis, Tennessee, IP serves customers worldwide, with manufacturing operations in North America, Europe, Latin America and North Africa.

SOURCE: International Paper

Canfor Pulp Reports Results for the Third Quarter of 2024

Oct. 25, 2024 (Press Release) Canfor Pulp Products Inc. ("The Company" or "CPPI") (TSX: CFX) today reported its third quarter of 2024 results:

Overview

• Q3 2024 operating loss of $209 million, includes a $211 million asset write-down and impairment charge in the pulp segment resulting from further deterioration in economic fibre availability following recent British Columbia Interior sawmill closure announcements.
• After taking into consideration one-time items, Q3 2024 operating income of $2 million compared to similarly adjusted operating loss of $6 million in Q2 2024.
• Modest improvement in NBSK pulp unit sales realizations driven by steady North American pulp pricing through most of the third quarter and favourable timing lag in shipments, despite weak demand in China and notable increase in pulp producer inventory levels.
• Orderly wind down of one production line at Northwood NBSK pulp mill completed in August.

For the third quarter of 2024, the Company reported an operating loss of $209.3 million, including an asset write-down and impairment charge totaling $211.0 million within its pulp segment.

In recent years, the Company, like other pulp producers in central and northern British Columbia ("BC"), has experienced a significant reduction in the supply of sawmill residual chips driven by extensive temporary and permanent sawmill curtailments and closures in the region. In response to these fibre constraints, the Company has taken several actions including securing additional fibre supply, prioritizing discretionary capital spending to maximize fibre utilization and recovery, as well as making rationalization decisions with respect to the Company's operating footprint.

Notably, the Company permanently closed the pulp line at its Prince George pulp and paper mill in early 2023, and more recently, completed the wind down of one production line at the Company's Northwood Northern Bleached Softwood Kraft ("NBSK") pulp mill ("Northwood") in August. Collectively, these curtailments reduce the Company's annual market kraft pulp production by approximately 580,000 tonnes.

During the third quarter of 2024, these fibre challenges were further exacerbated by additional sawmill closure announcements in the BC Interior, which were in response to weak lumber market conditions, upcoming increases in US tariffs on lumber exports and various regulatory complexities. As a result, the reduction in fibre supply as well as the ongoing uncertainty surrounding economic fibre availability continue to impact the Company and consequently, an asset write-down and impairment charge of $211.0 million was recognized in the third quarter of 2024, as a reduction to the carrying value of the Company's pulp segment assets.

After adjusting for the asset write-down and impairment charge, the Company's operating income for the third quarter of 2024 was $1.7 million, a $7.3 million improvement compared to the second quarter of 2024. Despite some moderation in US-dollar pulp list prices to China during the current quarter, the Company's results largely reflected modestly higher NBSK pulp unit sales realizations, offset in part by reduced pulp production and shipment volumes in the period following the successful wind down of one production line at Northwood in August 2024.

CEO Comments

Commenting on the Company's third quarter of 2024 results, CPPI's President and Chief Executive Officer, Kevin Edgson, said, "The Company continues to face persistent challenges accessing economic fibre, the results of which led to another curtailment of our operations this quarter. These decisions weigh heavily on our results, as well as our employees, their families and the local communities. Despite these challenges, our business realized improved adjusted operating earnings this quarter, and we executed a safe, smooth and efficient wind down of one line at Northwood."

Third Quarter Highlights

Global softwood pulp market fundamentals experienced downward pressure throughout the third quarter of 2024 primarily driven by weak demand from China, as well as the introduction of additional global hardwood capacity. These factors, when combined with the traditional seasonal summer slowdown in global demand, led to a moderation in purchasing activity and prices during the current period. As a result, NBSK US-dollar pulp list prices to China, the world's largest consumer of pulp, declined in the quarter to a low of US$750 per tonne in August, before stabilizing through the balance of the period, ending September at US$754 per tonne. For the current quarter overall, US-dollar NBSK pulp list prices to China averaged US$771 per tonne, down US$40 per tonne, or 5%, from the prior quarter.

Other global regions, including North America, experienced a delayed impact on price moderation, as prices remained steady for most of the third quarter, with slight declines seen towards the end of the period. As a result of these market conditions, particularly in China, global softwood pulp producer inventories experienced a notable increase in the current period to well above the balanced range, ending August at 50 days of supply, an increase of 12 days compared to June 2024.

Pulp production was 125,000 tonnes for the third quarter of 2024, down 5,000 tonnes, or 4%, from the second quarter of 2024, principally reflecting the wind down of one pulp line at the Company's Northwood pulp mill, which was completed safely and efficiently in August 2024 (approximately 50,000 tonnes).

The Company's paper segment experienced an operating loss of $0.8 million in the current quarter, compared to operating income of $1.9 million in the previous quarter. This decline was largely driven by reduced paper production and shipments in the current period, primarily as a result of minor mechanical failures at the paper machine.

Outlook

Looking forward, global softwood pulp market conditions are anticipated to experience a slight improvement through the fourth quarter of 2024, as demand from the Chinese market is forecast to gradually recover and as elevated inventory levels slowly begin to normalize following the end of the seasonally slower summer months.

Results in the fourth quarter of 2024 will reflect the full wind down of one production line at the Company's Northwood pulp mill, including the impact on pulp production (a reduction of approximately 300,000 tonnes of market kraft pulp annually), shipments and costs. Looking forward, the Company remains focused on optimizing its operating footprint, enhancing operational reliability and closely managing manufacturing and fibre costs.

In addition, the Company will continue to evaluate operating conditions and adjust operating rates at its pulp mills to align with economically viable fibre supply. These factors could also affect the Company's operating plan, liquidity, cash flows and the valuation of long-lived assets.

Demand for bleached kraft paper is projected to weaken somewhat through the fourth quarter of 2024 with a modest slowdown in kraft paper demand anticipated.

No major maintenance outages are planned for the fourth quarter of 2024.

Canfor Pulp Products Inc. (TSX:CFX) is a leading global supplier of pulp and paper products with operations in the northern interior of British Columbia, Canada. Canfor Pulp operates two mills in Prince George, BC with a total capacity of 780,000 tonnes of Premium Reinforcing Northern Bleached Softwood Kraft ("NBSK") pulp and 140,000 tonnes of kraft paper.

SOURCE: Canfor Pulp Products Inc.

Södra Increases Price for Saw Logs; Launches New Pricing Tool for Transparency

Oct. 21, 2024 (Press Release) - Södra is taking action to strengthen conditions for family forestry and to develop its member offer. On 21 October, prices were raised for saw logs and small-diameter sawable ranges, and a new tool is being introduced to increase security for forest owners. Södra is also taking further steps to improve transparency in the wood market.

To increase security for family forestry and raise the level of service in a raw material market with continued high demand and considerably more fluctuations than ever before, Södra is taking initiatives to strengthen the profitability of forest estates and their conditions, both long and short-term. Over the past year, a process to develop forms of business and improve business conditions has intensified and in conjunction with a price increase for saw logs, a new tool is being launched with the aim of improving transparency in the raw material market and increasing security for members.

“Over the past year, Södra has stepped up efforts to develop business relationships with members, while the mills’ focus on using every wood fibre is continuing with the same intensity. We are doing so to strengthen the position of forest owners in a situation where we see long-term demand for raw material from family forestry as more and more players want to use forests for various purposes. At the same time, we are taking action with a price adjustment in a market with a raw material shortage and global uncertainty, which means that the situation could change rapidly,” said Peter Karlsson, President of the Södra Skog business area.

The following price adjustments have been introduced and apply from 21 October 2024:

• The basic price for standard saw logs of spruce has been raised by SEK 100/m³sub
• The basic price for standard saw logs of pine has been raised by SEK 70/m³sub
• The basic price for small-diameter timber and sawlogs has been raised by SEK 70/m³sub
• New pricing terms are increasing security when signing contracts

It is important that forest owners can feel secure when signing agreements. Södra has therefore introduced Highest price 60 days, which means that forest owners will receive the new higher price should the price be raised within 60 days of signing the agreement. The terms apply to harvesting assignments, including the log price and delivery wood. The ranges covered are standard saw logs, small-diameter ranges of spruce and pine, and softwood and hardwood pulpwood.

A high level of service is important, but there are occasions where priorities need to be made and harvesting operations take place later than planned. Södra is therefore adding a price term for price compensation should harvesting be delayed. The price compensation means that a harvesting operation that has not commenced within one year of signing the agreement will receive the current wood price at 12 months, if the price is higher than when the agreement was signed. These terms apply to harvesting assignments, including the log price. The ranges covered are standard saw logs, small-diameter ranges of spruce and pine, and softwood and hardwood pulpwood.

“We are operating in a market and in a global situation where everything is moving very fast, and this is creating uncertainty for forest owners. It’s important for us, and something that is in clear demand, that we take steps to increase security in transactions between forest owners and Södra,” said Peter Karlsson.

Highest price 60 days and Price compensation delayed harvesting apply to agreements signed as of 21 October. The terms apply to agreements with a price on the signing date and are paid as a supplement for the main ranges (saw logs, small-diameter ranges of pine and spruce, and pulpwood).

Increased Transparency with Pricing Tool

Södra already publishes wood price lists openly on sodra.com together with price statistics, showing current price levels and how much premium has been added to signed agreements for regeneration harvesting. The current premium levels and regulations are also available on each member’s page in Min Skogsgård (My Forest Estate). Södra is now taking a further step and in November, a price calculation tool will be launched. The tool enables members to calculate a wood price per range on their own by setting various parameters such as volume, availability and nature conservation set-asides.

“Our offer is based on cooperative principles where transparency is very important. We want to contribute to a fair payment for wood across the entire market and we believe that we can do this best by being transparent and open,” said Peter Karlsson.

SOURCE: Södra

Ahlstrom Agrees to Sell Its Aspa Pulp Mill in Sweden to Sweden Timber

Oct. 14, 2024 - Ahlstrom has signed an agreement to sell its Aspa pulp mill in Sweden to Sweden Timber. The agreement includes the pulp mill and all its operations.

Terms of the deal were not disclosed.

Sweden Timber is a Swedish wood processing company with assets also in papermaking and wood composites.

The Aspa pulp mill, which is located in Aspa, Sweden (about 122 km or 76 miles south of Stockholm), produces bleached and unbleached softwood pulp that is used in a broad range of applications in paper and sold globally. It has an annual capacity of approximately 200,000 tonnes and 174 employees.

According to Ahlstrom, several external parties have expressed interest in acquiring the Aspa plant throughout the years. For Ahlstrom, it was important to find an owner who has an interest in further developing the mill and ensuring its long-term success.

"Aspa mill and its employees have done a great job contributing to Ahlstrom's success over the years, and I'm very thankful for that," said Wolfgang Laures, Chief Operating Officer at Ahlstrom. "We believe that Aspa will have a better home with Sweden Timber, which is looking to develop its pulp production capabilities.

"This divestment allows us to focus on Ahlstrom's specialty materials portfolio," Laures added.

Mikael Arvidsson, CEO of Sweden Timber, commented, "We look forward to continuing business and developing Aspa together with the mill's experienced team. We are committed to continuing to serve existing customers in the future with Aspa's high-quality pulp."

Ahlstrom expects the transaction to be completed during the fourth quarter of 2024.

SOURCE: Ahlstrom