SAO PAULO, 5 July 2023 (PPI Latin America) - Klabin confirmed that the ramp-up of its new flexible paper machine No. 28 (PM28) in Brazil is taking place as expected and that the equipment should produce around 190,000 tonnes this year, between kraftliner, white top liner, and boxboard.

 

The PM started up on June 9 and is currently following the expected learning curve, producing kraftliner during the first weeks of operation until some technical parameters are reached.

 

In an exclusive interview with Fastmarkets, José Soares, Klabin's commercial director for papers, detailed that the PM will keep moving its output toward more complex products, including boxboard and liquid packaging board (LPB), in the coming weeks.

 

When working at full capacity, the PM28 will be able to produce 460,000 tonnes per year of boxboard. White coated boxboard grades — such as triplex and solid board — will amount to 105,000 tonnes of this total after the company completes an additional investment in the project in 2024.

 

Soares commented that the new PM had a very smooth start-up, with fewer technical problems compared with previous projects, and boxboard output should begin before the end of July.

 

The executive stressed that the focus of PM28 is exports, since total Brazilian boxboard market domestic sales in 2022 accounted for 625,000 tonnes.

 

“It would not be possible to allocate the entire new production from this PM in the domestic market, it has to be in the international market,” Soares said, adding that the local market participants should not expect a large influx of extra tonnages reaching the market.

 

According to Soares, even if Klabin decided to direct more volume to Brazilian customers, this would not take place immediately, since boxboard buyers demand several steps of trials.

 

"First, we need to convince the end-users, then the printing companies, and only then sell the boxboard. Even if we wanted to, it wouldn't be simple. Of course, we will also sell in the domestic market, but it is a process, it doesn't happen overnight," he argued.

 

Regarding international sales, Soares explained that the production from the new PM will be spread across the globe, with some important buyers placed in North America and Europe.

 

"With PM28, Klabin will have a stronger presence in the European region; also the Southeast Asian market, which is very important, and Latin America, for example."

 

Markets. One thing helping Klabin reach more clients is that the new PM will allow the company to also offer lightweight boxboard with high technological properties, a similar move to what occurred with kraftliner in the past, when companies were looking for lighter corrugated board.

 

The new PM will offer paper with a mix of softwood and hardwood fibers that allow basis weight to significantly drop, and customers will produce more linear meters with the same tonnages they used to buy in the past.

 

"Currently, there are few boxboard alternatives in the market with basis weight below 200 g/m²."

 

The company also wants to reach new customers in the pharmaceutical and beauty markets in 2024 with their supply of white boxboard.

 

“We will also reach new segments of the food market, promotional and advertisement clients, the overall publishing market," Soares pointed out. With white grades, the executive believes that Klabin's portfolio will be "complete,” especially for the foodservice sector.

 

As an example, Soares mentioned the markets for food trays and paper cups: "We already produce cups that are brown on the outside and white on the inside, but next year we will have full white cups, Catering to both preferences."

 

According to Soares, 50-60% of the production from PM28 will be focused on the milk and beer markets, the latter with carrier board. The remaining 40% of production will be diversified, "still [mostly] within the food industry."

 

Currently, around 60% of PM28 volumes are under contracts, a level that can reach 70% in the coming months.

 

Short-term. Soares commented that the short-term outlook for the boxboard market in Brazil is positive, since historically the second half of the year tends to be more positive.

 

"There is demand for toys, panettones, and special campaigns that are regular in this period of the year.”

 

Regarding the aseptic packaging market, where PM28 should allocate a good part of its sales, Soares said that the demand had been growing, but now is stablizing.

 

"Our end-users speak of growth stabilization, accommodation, something that was not happening before. It is a more expensive product than others and due to current economic scenario [such as increased inflation and families debt] we see a contraction in consumption."

 

By sandy.oliveira@fastmarkets.com and marina.faleiros@fastmarkets.com

https://www.risiinfo.com/ic/news/marketprices/containerboard-stora-plans-to-permanently-close-two-pms-klabin-plans-holiday-shut-as-global-demand-still-soft226936.html