We think Brazilian producers are best positioned in a market that is generally under pressure, due to: i) scale; ii) better cost position; and iii) a generally superior operational stability. We expect Chilean producers to catch up as low cost investment matures, while Indonesians can also be well positioned if wood availability remains normalized. Producers in North America, particularly in Canada, and in the Nordics, are at a more challenging position, although Europeans have had some recent tailwinds. On ...

Summary of Suzano's Investor Day Conference Call Company Overview - **Company**: Suzano - **Industry**: Pulp and Paper Key Points and Arguments Strategic Focus - Suzano is transitioning from a five-pronged strategy to a focus on two main avenues: competitiveness and value extraction from existing projects [2][4] - The company is finalizing a cycle of capital allocation, with significant investments in projects such as Cerrado, Limeira, and Aracruz [3][4] Market Outlook - Forecasts a solid growth of hardwood pulp demand, estimating an increase of 4.5 million tons until 2029, driven by tissue grades, paperboard, and specialty papers [6][7] - The share of hardwood pulp is expected to grow, with an additional demand of 700,000 tons in 2025 alone [8] Competitive Landscape - Verticalization in China is a concern, with 6 million tons of hardwood pulp projects confirmed, potentially reducing the addressable market for Suzano [10][11] - The company is monitoring the dynamics of operating rates and wood chip availability, which could impact costs [12][13] Demand and Supply Dynamics - Demand growth is projected at 3.1 million tons until 2029, while supply capacity is expected to increase by 4 million tons, leading to a demand-to-capacity ratio below optimum levels [16][17] - The current market scenario is unsustainable, with 15 million tons of pulp production losing money [21] Innovations and Initiatives - Suzano is actively engaging over 70 customers in its fiber-to-fiber agenda, achieving a 12 percentage point increase in hardwood usage among a control group of tissue players [26] - The company is investing in enhanced eucalyptus fibers to improve product quality and performance [28] Consumer Goods Strategy - In Brazil, Suzano has achieved an 18% price premium compared to competitors, with plans to increase market share through brand innovation and product launches [33][34] - The joint venture with Kimberly-Clark is expected to close by mid-2026, aiming for operational gains of $175 million [36][38] Competitiveness in Paper and Packaging - Suzano is focusing on reducing cash costs and improving competitiveness in its paper and packaging business, with a target of 21% cash cost reduction over the coming years [46][48] - The company is expanding its operations in the U.S. and leveraging long-term contracts to enhance market position [42][44] Sustainability and Forest Management - Suzano's forestry strategy emphasizes resilience against climate change, with investments in silviculture and genetics to increase productivity [53][54] - The company is committed to sustainability, with 40% of its debt linked to sustainability targets [62] Financial Projections - Projected total operational disbursement of BRL 1,983 per ton in 2027, reflecting a disciplined approach to cost management [59] Additional Important Content - The company is utilizing digital tools to enhance operational efficiency, including the use of digital twins in production processes [50][51] - Suzano's sustainability strategy is integrated across all business units, focusing on water, climate, biodiversity, and social impact [61][62]

Investment Rating - The report does not explicitly state an investment rating for the pulp and paper industry [1]. Core Insights - Chinese pulp prices for May decreased by 13% month-over-month (m/m) for hardwood and 11% m/m for softwood, with hardwood resale prices declining by 5% and softwood resale prices decreasing by 2% m/m [5]. - In Europe, pulp prices remained stable, with hardwood prices flat m/m and softwood prices increasing by 1% m/m [5]. - China's paper prices showed mixed results, with most grades experiencing flat to low single-digit declines m/m, while containerboard prices slightly increased [5]. - Compared to their 5-year historical averages, paper margins are 38% below for ivoryboard and 15% below for tissue, while 5% above for uncoated woodfree (UWF) and 13% above for coated woodfree (CWF) [5]. - China’s pulp port inventories increased by 3% m/m to 2.2 million tons (Mt), exceeding the historical average of 1.8 Mt [5]. - European port inventories declined by 13% m/m in April, reaching 1.3 Mt, aligning with the historical average [5]. Summary by Region Global - The report includes a comprehensive overview of global pulp and paper prices, production, and consumption trends [6]. China - Pulp prices in China for hardwood are at $517 per ton, down 13% m/m, while softwood prices are at $712 per ton, down 11% m/m [7]. - Paper prices in China show a range of changes, with coated woodfree at 5,475 CNY per ton, down 4% m/m [7]. Europe - Hardwood pulp prices in Europe are stable at $1,194 per ton, while softwood prices increased to $1,597 per ton, up 1% m/m [7]. - Containerboard prices in Europe have risen by 1% to 3% m/m [5]. USA - In the US, coated woodfree prices are at $1,515 per ton, stable m/m, while uncoated woodfree prices are at $1,610 per ton, also stable m/m [7]. Latin America - The report highlights trends in containerboard shipments in Brazil, indicating a year-over-year growth [70].