UPM expects higher pulp prices this quarter: updates on Shotton sale

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UPM Shotton
UPM Shotton

Mill group UPM has said that it believes there will be higher pulp prices in the first quarter of this year.

In its full year results, the company revealed that sales had decreased by 16% to €8.5 billion (£7.48 billion) due to lower deliveries of graphic papers and lower pulp and paper prices.

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Profit before interest and tax was down 32% to €948 million (£834 million).

However, it noted that China was driving the demand for pulp, but the Covid pandemic continued to provide uncertainty. It expected though that pulp prices will continue to rise in the first quarter due to extra demand, but paper prices are likely to fall moderately compared with Q4 2020.

UPM president and chief executive Jussi Pesonen outlined the company’s results and also gave a brief update on the sale of its Shotton mill in Wales, suggesting that the sale process “continued as planned” in a call to investors.

In his results statement, he said: “The star performers of the quarter, as for the whole year, were UPM Raflatac and UPM Specialty Papers. These business areas benefited from favourable markets and changes in consumer behaviour, e-commerce and retail. Both businesses had taken commercial and efficiency measures to improve profitability and started the year with already improved margins.

“In UPM Biorefining the demand for pulp, renewable fuels and timber was good. China is leading the demand growth in the pulp market. Market prices for pulp have been at a low level for quite some time, and the first price increases during the fourth quarter were offset by changes in currencies. Two extensive pulp mill maintenance shutdowns pushed the quarterly results down to break-even.

“The performance of UPM Communication Papers in the last quarter was better than the two previous quarters due to seasonally low energy costs and higher year-end demand. However, the market demand for graphic papers was down 14% year-over-year. The closure of UPM Kaipola paper mill in Finland was finalised at the beginning of 2021 and the sales process of UPM Shotton paper mill in Wales is ongoing. The measures taken were timely and necessary for the efficiency and competitiveness of the business.”

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