PAPER & PACKAGING : Changing script

Research evidence excerpt

PAPER & PACKAGING : Changing script

Figure 3: Assessing risk and opportunities

Stora Energy cost Mondi UPM SCA Enso exposure

Ramp up Risk Stora Mondi SCA UPM and Leverage Enso

Stora Non-Paper SCA Mondi UPM Enso Related revenues

Stora Nordic Wood Mondi SCA UPM costs deflation Enso

Source: BNP Paribas Equity Research estimates

Paper market is facing challenges – starting with pulp

All the companies discussed in this report have exposure to pulp, with UPM and Stora

having the highest exposure. For this “grade” we see that after a quiet 2026 in terms of

capacity, several companies (mainly in Asia and South America) have announced new

projects that will start production in Q4 2026. This will put pressure on supply in a demand

environment correlated with GDP that is slowing down (with slight rebounds before the

Middle East crisis due to some stockpiling). Stock levels are especially high in softwood,

while pressure is accelerating in a sector that has significantly improved its cash cost in

recent years.

We expect the recent price increases to stabilise and, assuming no demand recovery,

for prices to start falling in Q4 2026 as a result of the new market capacity.

Container board more impacted by energy inflation

About 80% of container board in Europe comes from recycled paper, which means

greater cost exposure to both OCC (former corrugated container) and energy. With a

EUR80/t increase in Testliner since the start of the year, we saw a stable price month in

May, suggesting that price hikes are becoming more difficult even though energy costs

have not eased. We expect an additional rise in H1 and a modest correction in H2, as

the Testliner sector, like pulp, is set to expand capacity despite an overcapacity situation.