Pulp Friday: China Hardwood Prices Contract Further

Research evidence excerpt

Pulp Friday: China Hardwood Prices Contract Further

Rodolfo Angele, CFA AC Latin America Equity Research

(55-11) 4950-3888 31 July 2026 J P M O R G A N

rodolfo.r.angele@jpmorgan.com

Paper & Packaging: Pricing cycle starting to pick up pace, increasing earnings

expectations for corrugators; Upgrade International Paper on better risk/reward set-

up. Last Friday, Green Markets reported that PKG had announced a price increase of $140/t

for US kraftliner, to be implemented on 1 September 2026 (read first take here). While we

think that a full implementation is unlikely, we take this opportunity to address a couple of

key debates. In this note, we discuss: (1) the current and implied price/cost potential of the

US linerboard market, (2) where we think prices should settle after considering the incentive

price needed to add new capacity, (3) what this price increase means for valuations, and (4)

how this impacts peer companies differently. We conclude that this latest round of price

increases is not cost driven but rather driven by favorable supply/demand dynamics and

prices still being below levels needed to incentivise new capacity. Furthermore, we see PKG

and IP as the most levered to this pricing upside and, when it comes to valuation, IP is the most

leveraged of all. Accordingly, with upside risk to our own pricing estimates and expectations

that price /cost continues to evolve positively, we upgrade International Paper to Overweight

(from Neutral) as the valuation starts to screen more attractively. As discussed below, we

continue to maintain our preference for both Smurfit WestRock and Packaging Corp. of

America - here.

Utipulp – Monthly European Pulp Consumption & Inventories

Utilpulp: European pulp consumption decreased in June; inventories down 12.0%

YTD.