15 March 2026 | 6:51PM BRT Equity Research Pulp & Paper: Key Debates Going Into Shanghai Pulp Week We are en route to Asia to attend meetings around the Shanghai pulp week with industry participants. We brainstorm on the key topics to be discussed. Asia woodchips markets: With recent news around Indonesia forest license revocations and a series of new pulp capacity additions both in China and Indonesia, we will be looking for details around supply sustainability and pricing outlook. The market seems balance ...

Summary of Key Points from the Conference Call Industry Overview Basic Materials - China - **Metals Market Reactions**: Geopolitical risks, particularly in the Middle East, are impacting energy supplies and influencing metal prices. [1] - **Copper**: - LME copper price decreased by 3.6% WoW to USD 12,817/t - Domestic copper price fell by 1% to RMB 101,250/t - Domestic demand is recovering, but high Shanghai inventories are limiting spot premium improvements [1][34] - **Aluminum**: - LME aluminum price increased by 11.7% WoW to USD 3,493/t - Domestic aluminum price rose by 4.4% to RMB 24,450/t - Margins expanded to RMB 8,513/t due to expectations of tighter global supply amid rising tensions [1][34][51] - **Other Metals**: - Gold price declined by 2% WoW to USD 5,172/oz - Lithium carbonate price fell by 10% WoW to RMB 155,250/t - U₃O₈ slipped by 2.4% WoW to USD 86.8/lb - Shanghai cobalt price decreased by 0.7% to RMB 435,000/t [1][34] Steel Market - **Price Stability**: The steel market remained steady with no new policy signals from the Two Sessions. [2] - **Demand Recovery**: Post-holiday demand is recovering slowly, leading to muted buying interest. - **Price Changes**: - Rebar price rose by 0.4% WoW to RMB 3,252/t - Hot Rolled Coil (HRC) price edged down by 0.3% to RMB 3,264/t - **Inventory and Consumption**: - Finished steel inventories increased by 5.74% WoW - Apparent consumption rose by 4.35% to 6.91 million tons - **Raw Materials**: Iron ore price gained 2.06% WoW to USD 101.35/t, but margins remain negative [2][71][76]. Cement, Glass, and Paper Performance - **Cement**: - Average national cement price decreased slightly to RMB 329/t - Shipment ratio increased by 4.5 percentage points WoW to 12.1% - Inventory ratio decreased by 1.6 percentage points to 61.6% - Demand recovery is slow, with some regions lowering prices [3][94]. - **Glass**: - National average float glass price increased by 0.89% WoW to RMB 1,175/t - Xinyi float glass gross profit margin (GPM) expanded by 0.8 percentage points to 11.0% [3][102]. - **Paper**: - Paper prices increased by 1.2% WoW to RMB 3,625/t - Waste paper prices rose by 1.0% WoW to RMB 1,555/t [3][103]. Solar Materials - **Polysilicon Prices**: - N-type polysilicon price decreased by RMB 6/kg to RMB 50/kg (including VAT) - N-type granular silicon price fell by RMB 10/kg to RMB 45/kg (including VAT) [3][113]. - **Solar Glass**: - Prices for 3.2mm and 2.0mm coated solar glass remained stable at RMB 17.75/sqm and RMB 10.75/sqm, respectively - Daily capacity for solar glass production decreased to 88,100t/day, with inventory days expanding to 42.08 [3][115][127]. Additional Insights - **Geopolitical Risks**: The ongoing geopolitical tensions are significantly affecting the basic materials market, particularly in aluminum and copper sectors [1][34]. - **Market Dynamics**: The interplay between supply, demand, and geopolitical factors is crucial for understanding price movements in metals and construction materials [1][2][3].

Hey everyone, welcome back to OpenAI Build Hours. I'm Christine. I'm on the startup marketing team and today I'm joined with Charlie and Ryan.>> Hey folks, how's it going. >> Hey everybody. >> Awesome.Um, so Charlie is on our Dev X team and he will be leading the session and Ryan actually came all the way from Seattle to be with us live in the studio today. Um, and he's going to be chatting about the future of work. Um so today's session is all about um API and codecs.And if this is your first build hour, t ...

Core Insights - U.S. factory production saw a significant increase of 0.6% in January, marking the largest gain in 11 months, following a stagnant December [1][2] - The manufacturing sector, which constitutes 10.1% of the economy, experienced a year-over-year production increase of 2.4% in January [2] - The rise in factory output was broad-based, with durable goods manufacturing output rising by 0.8% and nondurable goods output increasing by 0.4% [4] Manufacturing Sector Performance - Economists had anticipated a production increase of 0.4%, while December's output was revised to a 0.2% rise [2] - Durable goods categories such as machinery, computer and electronic products, and motor vehicles saw notable gains, with motor vehicles and parts rising for the first time since August [4] - Nondurable goods production was bolstered by increases in paper, chemicals, and rubber products [4] Industrial Production Overview - Overall industrial production advanced by 0.7% in January, following a 0.2% increase in December, with a year-over-year growth of 2.3% [5] - Mining output decreased by 0.2%, while utilities production increased by 2.1% due to cold weather conditions [5] Capacity Utilization - Capacity utilization in the industrial sector rose to 76.2% from 75.7% in December, remaining 3.2 percentage points below the long-term average [6] - The operating rate for the manufacturing sector increased to 75.6%, which is 2.6 percentage points below its long-run average [6]

Core Insights - Sylvamo reported its fourth quarter and full year 2025 earnings, highlighting a commitment to capital allocation and long-term value creation despite a challenging environment [1][2] Financial Results - In Q4 2025, Sylvamo generated net income of $33 million and adjusted EBITDA of $125 million, with a margin of 14% [1] - For the full year 2025, net income was $132 million and adjusted EBITDA was $448 million, representing a margin of 13% [1] - Cash provided by operating activities for the year was $268 million, with free cash flow of $44 million [1] Capital Allocation - The company maintained a strong financial position with a net debt-to-adjusted EBITDA ratio of 1.6x [1] - Sylvamo reinvested $224 million in its manufacturing network and forestlands in Brazil to enhance its low-cost position [1] - A total of $155 million was returned to shareholders through share repurchases and dividends in 2025 [1] Regional Business Conditions - North America and Brazil showed positive industry conditions, while Europe and other Latin American countries faced challenges [1] - In Europe, cutsize paper prices were 100 euros per tonne lower than the previous year, but there are signs of improvement as pulp prices rebound [1] - In Latin America, the company is transitioning from a strong demand period to a weaker one, impacting geographic mix [1] Looking Ahead - Capital spending is expected to peak in 2026 with a focus on high-return strategic investments at the Eastover mill [1] - The company anticipates low points in free cash flow for 2025 and 2026 due to industry headwinds and ongoing investments [1] - Sylvamo aims to generate over $300 million in free cash flow and achieve a return on invested capital exceeding 15% in the future [1]

Financial Data and Key Metrics Changes - The company reported a strong operational cash flow and free cash flow in Q4 2025, even amidst a lower price cycle, indicating resilience and competitiveness in its business model [5][6] - The cash cost reached BRL 778 per ton in Q4 2025, a 3% reduction from Q3 2025, marking the lowest cash cost performance since Q4 2021 [23][24] - The company generated a positive free cash flow of $400 million in Q4 2025, reducing net debt to $12.6 billion and decreasing leverage to 3.2 times [26] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, driven by operational excellence in the supply chain [4] - The paper and packaging business unit saw strong volumes, particularly in the U.S., with a 21% year-over-year increase in packaging prices despite declining paper prices in export markets [8][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results by reallocating production to more competitive mills [12] Market Data and Key Metrics Changes - In Brazil, print and write paper demand increased by 1% in the first two months of Q4 2025, while paperboard demand grew by 2% [9] - The U.S. market experienced stable shipments in Q4 2025, but production increased by 2% due to new capacity, leading to pressure on operating rates [10] - In China, paper and board production increased by 17% in Q4 2025 compared to Q4 2024, contributing to higher demand for hardwood pulp [13] Company Strategy and Development Direction - The company views 2025 as an inflection point for total operational disbursement (TOD), aiming to improve competitiveness and cash generation capabilities [5][29] - A comprehensive multi-year program is being implemented to enhance competitiveness, focusing on reducing total operational disbursement [24] - The company is strategically positioning inventories for Q2 2026, anticipating maintenance downtimes that will reduce output [20] Management's Comments on Operating Environment and Future Outlook - Management highlighted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [29] - The delay of new market pulp capacity in Indonesia and the revocation of forestry licenses are expected to tighten supply, positively impacting market dynamics [71][73] - The company anticipates a gradual decline in cash costs throughout 2026, despite challenges in the first quarter due to planned maintenance [24][60] Other Important Information - The company renewed its revolving credit facility, increasing the line from $1.3 billion to $1.8 billion while reducing costs [26] - A new buyback program was announced to acquire up to 40 million shares over the next 18 months, following a previous buyback of 15 million shares [28] Q&A Session Summary Question: Insights on pulp market dynamics in China - Management indicated that despite new pulp capacity, the net effect on supply is neutral due to lower operating rates and shutdowns, leading to a positive import trend for hardwood pulp [34][35] Question: Future CAPEX trends - Management acknowledged potential for lower CAPEX in 2026 due to non-recurring items but refrained from providing specific guidance [33][37] Question: Buyback execution strategy - The company remains focused on deleveraging but is opportunistic with buybacks, considering various market factors [41][42] Question: Potential divestments and their impact on deleveraging - Management noted that divestments are not a primary strategy for deleveraging, which will primarily come from operational improvements [43][44] Question: Paper prices in China and their impact on pulp prices - Management confirmed that while paper prices are a factor, pulp prices generally lead the market, and they expect a recovery in paper prices [48][50] Question: U.S. packaging market outlook - The company expressed confidence in its U.S. packaging business, citing stable demand and long-term contracts that insulate it from market volatility [53][55]

Financial Data and Key Metrics Changes - The company reported a strong operational cash flow and free cash flow in Q4 2025, demonstrating resilience despite lower price cycles [5][6] - EBITDA for Q4 2025 reached $4.8 billion, an 8% increase quarter-over-quarter, supported by higher volumes and better prices in US dollar terms [15][21] - Cash costs were reported at BRL 778 per ton, marking a 3% reduction from Q3 2025, driven by lower input costs and operational stability [21][22] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, with a notable price recovery in all markets, particularly in China and Asia [4][12] - The paper and packaging business unit also delivered strong volumes, with a 21% year-over-year increase in the U.S. market, despite declining paper prices in export markets [7][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results [11] Market Data and Key Metrics Changes - In Brazil, print and write demand increased by 1% in the first two months of Q4 compared to the same period last year, while paperboard demand grew by 2% [8][9] - The U.S. market saw stable SBS shipments in Q4, but production increased by 2%, leading to pressure on operating rates [9] - International markets remained weak, with declining demand and oversupply, particularly in Europe [8][10] Company Strategy and Development Direction - The company aims to improve competitiveness through a multi-year program focused on reducing total operational disbursement [22][23] - The management highlighted the importance of maintaining liquidity and reducing net debt, targeting a reduction to $11 billion [40] - The joint venture with KC is progressing as planned, with expectations for closing in mid-2026 [27] Management's Comments on Operating Environment and Future Outlook - Management noted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [27][68] - The delay of new market pulp capacity and revocation of forestry licenses in Indonesia are expected to tighten supply further [68] - The company anticipates a gradual decline in cash costs over the course of 2026, despite challenges in the first half of the year [22][59] Other Important Information - The company generated positive free cash flow of $400 million in Q4 2025, contributing to a reduction in net debt to $12.6 billion [24] - A new buyback program was announced to acquire up to 40 million shares over the next 18 months [26] - The company is maintaining a healthy portfolio of FX hedges, with significant potential cash adjustments expected [25] Q&A Session All Questions and Answers Question: Insights on pulp market dynamics in China - Management provided updates on the pulp market, indicating a strong demand in China and a net zero effect of verticalization in 2025, with expectations for 2.8-3 million tons of new capacity in 2026 [32][34] Question: CAPEX trends and expectations - Management discussed the potential for lower CAPEX in 2026 due to non-recurring items, but did not provide specific guidance [31][35] Question: Buyback execution strategy - The company emphasized an opportunistic approach to buybacks, focusing on leveraging its balance sheet while considering market conditions [39][40] Question: Potential divestments and their impact on deleveraging - Management indicated that divestments would focus on non-core assets, particularly in the forestry business, but emphasized that deleveraging would primarily come from operational improvements [41][42] Question: Paper prices in China and their impact on pulp prices - Management noted that while paper prices are a factor, pulp prices typically drive paper prices, and they expect a recovery in paper prices [45][49] Question: U.S. packaging market outlook - The company highlighted its strong position in the U.S. packaging market, with stable demand and protected pricing under long-term contracts [51][52]

Financial Data and Key Metrics Changes - The company reported strong operational cash flow and free cash flow in Q4 2025, demonstrating resilience despite lower price cycles [4][5] - EBITDA for Q4 2025 reached $4.8 billion, an 8% increase quarter-over-quarter, supported by higher volumes and better prices in US dollar terms [14][25] - Net debt was reduced to $12.6 billion by the end of 2025, with leverage declining to 3.2 times [25] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, with a price recovery noted across all markets [3][12] - The paper and packaging business unit also delivered strong volumes, particularly in the U.S., with a 21% year-over-year increase in packaging prices [6][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results [11] Market Data and Key Metrics Changes - In Brazil, print and write demand increased by 1% in the first two months of Q4 2025, while paperboard demand grew by 2% [7][8] - The U.S. market saw stable shipments in Q4, but production increased by 2% due to new capacity, impacting operating rates [9] - International markets remained weak, with declining demand and oversupply, particularly in Europe [7] Company Strategy and Development Direction - The company aims to improve competitiveness through a multi-year program focused on reducing total operational disbursement (TOD) [23] - The management highlighted the importance of maintaining liquidity and reducing net debt as part of their strategic objectives [28] - The joint venture with KC is progressing as planned, with expectations for closing in mid-2026 [28] Management's Comments on Operating Environment and Future Outlook - Management noted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [28] - The company expects to maintain cash costs in line with Q4 2025 levels, despite challenges in the first half of 2026 [21][25] - Positive developments in the pulp market were attributed to supply-side changes, including the revocation of forestry licenses in Indonesia [70] Other Important Information - The company announced a new buyback program to acquire up to 40 million shares over the next 18 months [27] - A comprehensive review of CAPEX for 2026 indicated a nearly 20% reduction year-on-year [25] Q&A Session Summary Question: Insights on pulp market dynamics in China - Management indicated that new pulp capacity in China is expected to be offset by lower operating rates, resulting in a net zero effect on verticalization for 2025 [34][35] Question: CAPEX trends for 2027 - Management acknowledged non-recurring items impacting CAPEX in 2026 but suggested potential for lower numbers in the future [33][37] Question: Buyback execution strategy - The company emphasized a focus on reducing net debt while being opportunistic with buybacks based on various market factors [40][42] Question: Potential divestments and their impact - Management clarified that divestments are not a primary strategy for deleveraging, focusing instead on operational improvements [41][44] Question: Paper prices in China and their impact on pulp - Management noted that while paper prices are a factor, pulp prices generally drive paper prices, and they expect a recovery in paper margins [47][50] Question: U.S. packaging market performance - The company highlighted its strong position in the U.S. packaging market, insulated from broader market pressures due to long-term contracts [52][53] Question: Cost reduction levers in the pulp business - Management indicated that cash costs are expected to remain stable, with efforts focused on operational efficiency [78]

Core Insights - Suzano, the world's largest pulp producer, reported record annual sales volumes and net revenue for both the final quarter (4Q25) and the full year (2025) [1] - The company achieved a 15% increase in pulp and paper sales, reaching 14.2 million tonnes compared to 2024 [1] - An improvement in cash cost of pulp production was noted, indicating enhanced operational efficiency [1] Financial Performance - Record annual sales volumes and net revenue were achieved in 2025 [1] - Pulp and paper sales increased to 14.2 million tonnes, reflecting a 15% growth from the previous year [1] Operational Efficiency - The company reported an improvement in cash cost of pulp production, highlighting efforts towards operational efficiency [1]

Core Insights - Packaging Corporation of America (PKG) reported adjusted earnings per share (EPS) of $2.32 for Q4 2025, missing the Zacks Consensus Estimate of $2.41 and reflecting a 6% year-over-year decline due to lower volume and unfavorable production results from the acquired Greif Inc. business [1][10] Financial Performance - Q4 sales increased by 10.1% year-over-year to $2.36 billion, but this figure fell short of the Zacks Consensus Estimate of $2.42 billion [3][10] - The cost of products sold rose by 14.3% year-over-year to $1.92 billion, leading to a gross profit decline of 4.7% to $448 million [3] - Adjusted operating income for Q4 was $310.2 million, a 2.1% increase from $303.9 million in Q4 2024 [4] Segment Performance - In the Packaging segment, sales rose by 10.8% year-over-year to $2.19 billion, driven by higher prices, although lower production and sales volume offset this growth [5] - Total corrugated product shipments fell by 1.7% year-over-year, but including the Greif business, shipments per day increased by 17% [6] - The Paper segment reported revenues of $154 million, up 1.8% year-over-year, but lower than estimates, with adjusted operating profit decreasing to $33 million from $35 million in the prior year [7] Annual Performance - For FY 2025, PKG's adjusted EPS was $9.84, below the Zacks Consensus Estimate of $9.93, while total sales reached $8.99 billion, reflecting a 7.2% year-over-year increase but missing the consensus estimate of $9.06 billion [8] Cash Flow and Outlook - The company ended 2025 with a cash balance of $668 million, down from $852 million at the end of 2024 [9] - For Q1 2026, PKG expects higher year-over-year volume in its legacy corrugated products plants, projecting an EPS of $2.20 [11] Stock Performance - PKG's shares have declined by 3.8% over the past year, compared to an 8.6% decline in the industry [12]