Suzano (SUZ) 13 Aug 212021 Q2 Earnings call transcript

Company Profile

Participants

Walter Schalka	CEO
Marcelo Bacci	Financial and IR Executive Officer
Fabio Almeida	Paper and Packaging Executive Officer
Leonardo Grimaldi	Pulp Commercial Executive Officer
Aires Galhardo	Pulp Operation Executive Officer
George Staphos	Bank of America
Leonardo Correa	BTG Pactual
Thiago Lofiego	Bradesco
Daniel Sasson	Itau Corretora
Carlos De Alba	Morgan Stanley
Rafael Barcellos	Santander
Caio Ribeiro	Credit Suisse

Call transcript

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Operator

Ladies and gentlemen, thank you for holding and welcome to Suzano's Conference Call to discuss the results for the Second Quarter of 2021. We would like to inform you that all participants will be in a listen-only mode during the presentation of Mr. Walter Schalka, Chief Executive Officer; Marcelo Bacci, Financial and Investor Relations Executive Officer; Fabio Almeida, Paper and Packaging Executive Officer; Leonardo Grimaldi, Pulp Commercial Executive Officer; and Aires Galhardo, Pulp Operation Executive Officer. [Operator Instructions] Before proceeding, please be aware that any forward-looking statements are based on the beliefs and assumptions of Suzano's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events, and therefore, depends on circumstances that may or may not occur in the future.

differ general also industry of affect could results that operating and Suzano understand expressed cause could those factors the to should economic forward-looking conditions conditions, other and in You such from statements. materially future results

to like over floor Mr. the Schalka. to may Schalka, you turn proceed. Walter Please, I'd Now Mr. Walter

Walter Schalka

With would have morning, It's and of all-time record the a quarter you paper the the operational performance to and I good Welcome our the and everyone. ready price great quarter flow second with will we shorter to Good despite for after very session XXXX cash expected results a me and than executive solid free to committee like reinforce resilience. company, Suzano. Q&A of realization what present here. pulp all our pleasure EBITDA to here, of be competitiveness in you be presentation. session with and volumes

important the to I think bring very it's surface robust sheet. to very balance our

We and critical high are cost set. critical intensive liquidity of that in industry debt have the high is for what low long-term and we

of will continue net debt for our to of view we to policy we financial pleased have that X.X to reaching pursue in our strategic all to two continue future, been are you It's different discipline. them. present three - times times as to five is avenues important developments financial reduce our on well very and see pursuing very and the EBITDA We we in our between over our target and three that leverage times what reinforce

relevance project. expansion right the that is Cerrado presented One of now them is with on by our related pulp

information different share at you the of islands not any project with are we different on are with We the vendors continuing to negotiate to this going since project. today, additional

Bond hopefully the green cap We the had to with happen and and the our water inclusion is on to you with pleased is second this Sustainability-Linked agreements important of diversity our quarter, well we - mention leadership. all quarter new mention have during targets consumption are It's present innovability in coming we related that I'm we as now the related €XXX the months. is during as IPO XX% our have right future, have we and over for call of ESG of with new Board light the to our our in we - market had of biodiversity, with related our to very the the developments. well present over ESG the different one million. and to investment around where company we As market the targets well the ownership going islands, get where as spin going woman very to

going to Fabio on Now who our pass quarter. about I'm is to paper developments Almeida, the going to us share with last

Fabio Almeida

morning and Walter, Thanks. good everyone.

markets, domestic Brazil in due XXXX, QX we international volumes quarter. pre-pandemic delivered solid harvest terms the levels have total delivered for the tons, XXX,XXX our our was of markets mainly of In the best goods. were When sales were we a has impacted last XX% X. quarter, volume higher growing pre-pandemic XXXX papers in compared seasonality than during recovered to Let's in the overall by Volume-wise, basis weak our at of quarter, a performance, demand price years. quarter totaling strong packaging volumes of our represented well-known compared imposed second the already domestic paperboard Latin XX% surpassed and the Nevertheless revenues and we In unit resilient of better higher sales because recover to XXXX. consumption the the XXXX, demand in business writing due address during to semester, of due higher Slide combination quarter Domestic bottlenecks measures. constraints to better year-over-year by the export of quarter-over-quarter main Logistics analyzing quarter QX increase restriction sales of packaging performance the XX% of and our When in sales second look in the and first and mainly a comparison logistics markets America restricted quarter the continuous price. five XXXX when also our on the by the market, export at in the paper the domestic even international wave of serve. Suzano the a volumes. to volumes have total challenge in the pandemic XX% results on total Despite negatively basis same a outbound indicating in look in second levels printer and to the quarter. and demand COVID the the

XX% XXXX in was of average than quarter price price X% higher XXXX. net QX average higher and Our our same the quarter than during

the announced respectively. to in combination serve. period, higher location, a markets of XX% when XXXX higher ability, our for operations QX Suzano EBITDA and successfully BRLXXX During quarter, being XX% implemented and previous With increases lines volumes, our the strong XXXX for the in we million compared price in product has QX has regional reached price better

new record Our business. has packaging a ton, paper for per and the margin over EBITDA reached BRLX,XXX

inflation short-term shipment major our challenge maritime of overcoming logistics ahead, reside continuous in minimizing imports. disruptions the Looking and the pressure of

when present grew offer that we even enlarge products our our to Leo with account and also new sized and would semester with Suzano customers first our results now to I is end by with worth to efficiency, small business on aligned our the for taking to the While total XXXX Sales market mentioning will customers. times platform, improving sustainable XX% our are already when and e-commerce customers of six more strengthening pipeline. pulp our innovation solutions It unit. and our more operational reaching strategy unique like which middle focus addressable invite also users. strategy keep revenue for compared of go-to-market to our accounts we XX% of

Walter Schalka

We are not hearing you, Leo.

then go to you Leo. be the we would it and back one for next if come think, better will I

Aires Galhardo

I'm speaking costs. cash here about

Slide are on the screen? I'm We in X.

Walter Schalka

Yes, you are screen. on

Aires Galhardo

everyone. Good Okay. morning,

the are X. in Slide We

The exports cash by exogenous 'XX performance, fixed availability costs. in downtimes due issue quarter-over-quarter packaging to input to and and turbo cost quarter Brent marked pressure rising chlorine wires the operational during to and factors of reduced impacting cash was our contribute the again, place followed scheduled are to price, commodity mainly dioxide of related, costs, by that second year-over-year in energy both lower and Other volume inputs on maintenance wood affect the generators. in that the turn costs takes the increase for costs example, higher routine due of energy

second a previously started the on directly related to the in to nonrecurring the In allocated production and cost considered Suzano recognize disbursements on COGS. addition, to nature longer the cash be is quarter, COVID-XX no

For the X, efficiency, the contribute expects market. XXXX such low to cost company management single-digit coming increase. about In a mill pressures quarters, as to a part and in in the distance term the for operational cash reduction the line will disclosure over guidance middle wood external second the ever third costs forest cost the production of with a cash quarter efficiency, to to of and mitigation the increase that remain times lower up flat should energy initiatives between

the pass to Now to Bacci the I floor presentation. continue Marcelo

Leonardo Grimaldi

here. is this Aires, Hi Leo

hear You me now?

Aires Galhardo

Yes, do. do. I I

Leonardo Grimaldi

Okay.

Aires Galhardo

Please go ahead.

Leonardo Grimaldi

So go for folks Page back X. maybe I'm here. we problems to my can sorry technical

moving So X. back to Page

second at for unit. increasing to the sales pulp were prices view the on you business guys regions. Just They very all give our supported XXXX, the quarter and strong by positive of results of volumes

will have XXXX quarter consumption production but as June in Europe, in across reduced was May with in paper exceeded board nonrecurring quarter, of the weaker and June in periods. Pulp downtimes adjust end sales seasonal you China, has the our July. our and months, producers previous note, and expectations a whole during the X.X million prior line to notably paper totaled intake quarters taken As XXXX and for in to tonnes all which grades second is

to as this that our is speak, optimum supply still ongoing, as is we inventories taking have we unaffected. actions levels, the chain - to we Our quarter taking customers closed guarantee been and have been below and this operational

have the ton, when Our XX% first $XXX reached Q compared average prices per increase to 'XX. which export is a the quarter for

us our and nonrecurring order half specific QX. Some delivering even would We during the limited our have quarterly and quarter from in intake also emphasize China the affected factors from have quarters. a the second when do higher Asia combine of end we like [indiscernible] like prices, second lower our factors as not here I with have a customer specific And this and price to mainly captive beginning geographical themselves affected would to as to the of realization. us to during the follows: delays this quarter, the mix of these invoicing due from during customers planned And different highlight to expect I the and first quarter repeat that to next we

quarter our with XX% all-time record BRLX.X the billion Looking pulp the represents a in the an to margin. business performance, for EBITDA EBITDA

and pulp. price are in we of demand Now forward, the markets therefore, or of all in pickup corrections, end we August looking recovery demand paper already the September intake expect and early major consumption for China, board sensing and as increasing, especially after the order for recent the in

on This unexpected coupled despite for we of should which, that the will quarter. to unexpected semester. continue ramp-up markets expect the of and with forecast downtimes all On the end to just here, supply several gradual major arrive the logistic expected the out, tons supply during the of the XXX,XXX downtimes all capacity that with concentration of new we of respective only for volumes RISI's recent upside account the to next fourth second quarter, reinforce almost side, what maintenance downtime throughout occur the the often challenges risk constraints point see

level now to see at he'll XX% X% our so when going pulp June, With going in in China, Europe, when little position. even I'm also compared now to in financial eyes, since June to bit according which AeoPulp July ports about said, I'm to pulp fallen XXXX. to skip quite the that and We have reduction a according compared balanced Bacci reports. inventories to to a RISI move is paper in And lowest July early on posting that stocks talk

Marcelo Bacci

you, Thank Leo.

where in significantly reduced X, invested Page months. debt the on billion, a that our during $X billion we last to QX, to on Net $XX.X see we deleveraging move path. XX Let's reduction

maturities of after XX% X maturities, XXXX. reached is our at the down from a debt. we can right-hand approaching our by quarter, ratio right-hand issued is more are side very which liquidate we rate, one very financial on side policy. liquidity, see advancement. on debt to a or the which bond leverage matures Last up one of successfully determined proceeds you now Our billion comfortable And the of attractive coming now levels using from $X With on with average sit the also that, our a of X.X page. on the our X.Xx, we on last We position sustainability-linked ago short-term significant liquidity year page, quarter, at months tenure the XXXX. XX total very as to covers

a that of Moving the very sharp real. was QX to Page X. Brazilian appreciation of We see a quarter

Our responded future. offset delivering will in that, lower potential gain a revenues hedging marked-to-market that portfolio to the

seen to not has in we relevance be losses gain. cash mark-to-market It the the a mostly gain. past Of is posted has according course, cycle that a over that It's have. have. business we same to the It that time the this

continues our debt of revenues this or dollar-denominated manner, offset posted appreciated. both through carrying and In be following potential only dollar-denominated directly FX will to strategy lower debt, same real the Our gains, the also derivatives.

at was is quarter, X.XX, now it X we situation different. end the course, Of of the are the at at

appreciation. to We protects robust us hedge BRL potential further portfolio flow continue cash a that from have

call at advancement average X, we in Our had significant a position well the last portfolio X.XX, is relation it which sits as quarter. now to

X. Page to Moving

full year, project. that, Our financial as guidance quarter, confirm Cerrado billion evidenced With QX is billion BRLX.X amount We billion, you. our I discipline Walter. also BRLX.X Thank turn already the and the to for considering the to program. related BRLX same disbursed of on on CapEx back the our

Walter Schalka

in and follow I that initiatives very the important our organization. different resiliency very of terms structural value think is of five been strategic it's we competitiveness. clear have One creation the avenues our pursuing in

costs, cash how the and continue have is management have we is important our cost. well. increase part been the performance. this, initiatives important not short-term our and and we and solid we'll going with working only forward impact company results. some cash the cash our on is robust on expenses that to are our We we as future This will of operational of but reduce to some that on DNA, It's quite cost, that looking very This short-term very mitigate

financial very cash this, This discipline. keep but with we it's our from with well. results. We key will and way our programs, continue as us, a a conversion - Leverage, for to have hedging we operational not important working our metric liability will that and on our increasing the is management can portfolio

our vocal to have that We cannot that do a environmental advocacy the in change will beginning, only our the procrastinate last that I right It's of in will to We the as very for on our major with That mitigating we we the stakeholders of to to continue important the in be few the as we continue and operate the the and for shareholders As presented now. that that future. recognize emissions bring - continue importance but been side of presented of positioning value greenhouse the on initiative future. process, society on as reduction Cerrado mitigate the agent as not would innovability for create the can on will by the future. now emission reinforce company And an our and well to in on all very the climate project. society I as greenhouse was this and mentioned our is our social, biodiversity, impact well. process order days, a and impact the to like clear responsibility situation we to IPCC on this

can session. go Now we All be committee to the our questions. for will Q&A executive your ready

Operator

like would make Staphos George to question. Mr. Instructions] a [Operator

George Staphos

quarter. reduction them taking on things led I Congratulations would the work in delays China have had for those had the of call. and my you the ask had the market to in what question, you keep I you'll looked that specific in point? thanks on from you Leo, vantage mentioned been customers been being can good have for the yet place now think to price way of reported terms mentioned ongoing to otherwise input it costs? couple factors certainly your in tissue else have us, ongoing holding that in large escalation, in questions. the Thanks small I'll that everyone both and you XQ, costs three alleviated in be orders between you a everything for Thank able - facing impact export not turn the the do market, quarter, in second what do sequence. comment to on in XQ? progress would and you, luck lastly, saw than the to issues details we you lower a I your flowing guess the think flat you why otherwise had China in question. cost what up, realizations there And had your lower it is Second slightly again from at flat captive said invoicing. and orders Is initiatives and or been the in like quantify in cash equal, I'll also has realizations from then up and over, are

Leonardo Grimaldi

one each the this commercial two cannot effect beneficial our you peaking, had June. not of for this positive Okay. rollover fact Thank in was fact focused George. second China, and question. unfortunately of of disclose of well. it order for as first in invoicing quarter the the really again, these specific exact a quantify kind will to us. with the as May customers factors, is prices your We on effects, know, But to Thanks, these quarter we the didn't you Asian that intake that together from we were have In where and as strategy,

our not further that were that guarantee prices, will confirm this these factors future really repeat main they themselves the So and and expected for can the to we quarters. on contributed below which expectations,

I'm through points you question me. to your that tissue, all going to Regarding on go asked try the

recovering, pulp only only also tissue, prices, in the in throughout China. prices in and price order see First intake not the in of in happened, the July board paper but correction but for as all segments all, not when of the China we chain in

see intermediary obviously order smaller is generated we again. had So we see terms have We stocks previous market moving which chain that and that the that intake June. in the curtailment, were tissue of especially taken with productions in actions in May in consequently the reduced months

and lower that we size the tissue, and as producers now production. in the that returning also well small the producers low their levels. mainly also recovering And historic region to mid are are now purchases now or getting or of see So structure to

prices making is So perspectives intermediary we pulp happened positive rotate correction the of that prices of we all a reduction lot positive, which that that again and chain quite again, paper in see in July, sense. the is move, see and and stocks the

Aires Galhardo

question. Thanks for your

COVID-XX that coming Brazil, probably that we kind we protocol costs the cash to expected that of come these our believe in remain is I our quarters facilities. single lot will about cash moving predict cost. we of but with we a with we terms protocols our will our up in section flat what this have costs X%. have We mentioned reduced quarter X%, We or X%. to with here reduce around a in the probably in for second that probably X% actions digit, costs that quarters. vaccination And we the with in In of in last increase following

higher that expect a produce surplus in operating stability. turbo earnings our remain We have our to the increased we availability the in generators order and

any impact other chemicals for and the cash risk see All cost. to of this and are control, inputs in I reason, under don't our consumption

Operator

make Correa question. Leonardo would Mr. like to a

Leonardo Correa

So some numbers - to so of more, was just we understand don't wrong the insist I'm that which the think, realization main to out I on of still a limitations the disclosure, bit the next the quarter, little get you going price but on the I help probably us have quarter.

terms of a regional prices right. In with the pulp happening and effect, prices, lag some very carryovers right, the strong in second the in quarter, in rally in differences the quarter

the hand, other the right, drop On also happened, over very months. a big past

quarter, from prices of time, in the carryover, So can should is we is the the think a with second the just if effect clearly and third you at drop lagged how understand because evolution the in there about the there right, pulp same prices.

should a expect the to level theoretical be it I'm number argument Would of if that make model higher So help price the the vis-a-vis curious the does out prices? way can the we quarter? third the the over be you? you tax, I us would pulp like That sense with you for hear, in Is this ideal also been reduce been So that trying in as of price well. been How industry to the be pulp much. on evolution in would helpful Europe mean discounts years the very to past the observing Thank the pricings. very discounts has you markets? great. mainly - have

Leonardo Grimaldi

to track realization our question. on I'm and thanks order lower and Leo, established. was your question our going back May supply both your in regarding them price carryover. Asia to answer here, to This again Since related for June, is chain and of intake Okay. Leo and is

market, that market. are little to or terms see meaning up price we and almost price that very lags in dynamics are movements we in on what with So lags no tight we that invoicing of actually catch going the

second year. lag specific at so the in months least So of quarter our the for much, case in happening for future to shouldn't the Suzano the due effect occur

repeat your question, Regarding second - please can you Leo? sorry,

Leonardo Correa

discounts, sure. Yes, do pulp on Yes, The have we discounts. the pricing It's right? discounts.

Leonardo Grimaldi

Yes, discounts we past have seen increasing the time. through in

the pricing. are think our I actually volatility customers the we that fluctuation the what talking their and this year, to concern main of and is

we have a pricing biggest discussions the sense started. not them pricing And that customers model what to a the the how still structure with is our XXXX contracts that we the As get you see is collaborate in from again, or know, long can related we benefit concern model. from have will or run, lower to volatility contracts in

will with So the is the not next of the clear but having conversations or this we're happen tone the main year, for what still all of customers that captive Suzano. us main customers

Operator

like to a would Lofiego make Thiago question. Mr.

Thiago Lofiego

market market us you Grimaldi, is So if in give after color, now a little do bit questions to the conditions could so Back feel you two here. the more us you So recent the well. China, stabilizing the just pulp are could also you And price some sharp color as market prices? if seeing on demand in improved paper after drop the give correction? in China like

the COVID in recently. in paper in So any prices China how at one pulp same point to papermakers China inventory starting And within update at this and do rise situation the this situation is also, closed situation, the on see point? you China? question, that the China the is there the saw of ports inventory with We

question and So the year, you domestic And update you the give additional see how my quarter price on And And Brazil. in into going half different an for are second on market? demand for grades? demand you room this the is cardboard in of initiatives going then on also and into any third faring and could print hearing writing second anything for us paper that concerns or front? if

Leonardo Grimaldi

Thiago. Thanks, Okay.

start the I'm with questions. pulp So going side of to your

talked Firstly, related Kind bit little that speech. market about a conditions. to of my in

as of to or as have markets not expect demand in already and are, during say first make I what is the top consequently On that to this will and this We we some all, demand the factors should packaging levels, add China, of right? end but of trend increasing as benefits that of September, top even period. this will which of of paper see of and demand seeing most world, can which what in of going boost historical of demand help and I'm a of early we September, of beginning pulp September. of only lot also as which increase period recovering, that, demand, further So them to August mentioned, of additional recover some information really on pre-pandemic August, economies can end early of I end try August, that in are

still benefiting of spread low $XXX, and between almost is softwood recycled sensing are sorted substitution in that's of very alternatives which due hardwood, there hardwood at And tissue, this some used some the Second, in and looking to by helping price softwood in fibers, reaching especially availability time. a and big this to office case. third, a markets, are seeing products, customers much running also nontraditional away-from-home as their or we machines for opportunities keep virgin fiber us

So all quarter. the help on the should coming this demand

regarding supply, In scenario still industry, in we Suzano American for think the challenge logistics. be don't challenging a a that will That that or be global still terms solved see the term. not We will only near for of very South the producers.

I global all trade by impacted is that. think

as end they of challenges now and that own position because having speed they August, up production. their will concern be of make demand they sense have that so recovery We getting there and to correctly their machines sure and want customers of also also they material can that a raw their see September, early

due still to downtime their unexpected new as just to XXX,XXX statistics downtimes, And of the to last that least, So modeling, happen we statistically RISI tonnes but they - expect XXX,XXX RISI information two well. ago, and year. this of the brand presented this Conference America upside is and not during unexpected Latin repeating risk very important the fresh days have

reduced a sense, announcements we are in lot And China, up the beginning also China. see a the There of that but as in these August, our we one August. tremendously, believe June, compressing XX% we have that the of when positive year for starting start-up pulp and few We not the of they will as in more can May, previous the than increased as demand, Paper of see So of XX%, pricing. to for some and positive end as approximately U.S., in recovery. maybe prices pricing all as in have the only of levels factors, now. in days margin develop now are starting prices a that this of CNY markets of trend returns then is and demand add see producers from and in fundamentals of occur in catalysts in a of pickup happen July we reduction XXX

on of X your second of this important months. And starting here, it's last there pulp there X, we in The be last tonnes - to the month a so that year. stable reports paper capacity semester in that a inventories and new in Your customers China, year. X.X and nonintegrated this million there X% very consider paper in will see be lot additional pulp our I will decline nonintegrated of also show machines board the much alone China controlled. the controlled, in inventories China pulp Actually, inventories, decline, as mentioned, question last was in X,

on to market these on your overall sense obviously, paper or development regional producers that that any restraining some we will their the So prepared traveling recent haven't the paper of the or will of to dynamics upcoming help help wave for all questions. effect China. get pulp the and over Fabio, now, least, Up the but seen COVID. for being. on as That's have with he Last in machines not and pass consumption I'll the it now question can well. capacities, to our so of time

Fabio Almeida

question. for your Thank Thiago, you,

in purchases you have schools the year, what half government know, with should because the the And book also we same. the in the in-person should a attending have for stronger as demand historically, of schools also writing be help we the for demand of paper the Regarding demand national second And and happen Brazil to program. for year offices paper. half second of - for the and year this the expect opening the year we opening of of students to this should the also print

that the market. in have these the two should help we us demand domestic So with factors

There's anything more expect strong do change first second a year. and back of to be - market the don't As The on going we a one. to sustainable the to be demand strong tight. very we very the had expect is year. in sustainable as paperboard, as demand half products, to good very half of the second We of of the first e-commerce, half more the

your any this being. have forward, opportunities Regarding we As prices time arise? to going the continuously monitoring moment, prices about that questions are be of for for believe may good we market we the very that moving other

Thiago Lofiego

carryover Just versus a because been higher a the very in the might second prices quarter? the of quarter average second of quick quarter follow-up third the the here than the the second have on positive Is prices. quarter of in there end

Fabio Almeida

You're about prices paper - prices, asking correct?

Thiago Lofiego

Yes. Correct.

Fabio Almeida

Yes.

have We implemented…

Thiago Lofiego

end of third the yes. in Right, quarter, the

Fabio Almeida

repeat? can Thiago, sorry, I'm you

Thiago Lofiego

No, second realized the quarter. question there positive effect about Is third the in coming a is from carryover quarter? the the paper prices no,

Fabio Almeida

No, we for paper, increases price our that we have announced. have already implemented of most

So expect we carryover. should not any

Operator

Mr. question. Daniel would Sasson a to make like

Daniel Sasson

question My is on your first own inventory.

But you is the make start demand sure the they levels? just to second or going restoring my of You inventories industry to levels, expect clients But new selling that you does those in projects could dynamics think And question, back mentioned when produce. impact news proactively new a you up you the market? how expect effectively you everything you everything over in with and bit previous that quarters? to the I that mentioned not do supply normalized aim normalized comment given do that what basically to a the Or rather to which you next more do can produce? you supply will normalized that are in about question. you're the below good idea still be continue below sell really, you're mean at levels, see

Leonardo Grimaldi

give inventories. This Daniel, inventories what little with on. tell Starting Leonardo your But Obviously, I a of is question. for for thanks for went future here. more we cannot you Suzano. guidance bit can

low, actually continue levels. you and very inventories end lowest this the our were They have As the operational and of QX stocks that, us as speak. of ever stocks end since below historic and QX. They were continue in know, numbers QX, in our they been for such we optimum

is obviously to impacting moment machine keep this at challenge our again, without the our So customers. running,

that to doing supply possible in is chain all we're that So ensure sense. unaffected actions

going to and repetitive. much On not the quickly, that to supply that demand, try to recap I'm be

all paper we very and were the of August. sorted quarter season fibers sorted we weeks the now of positive and in virgin terms much quarter, office used also this volumes we in recycled a the of move end substituting paperboard projects be right, of few the of the also seasonality, They due grades demand or general And a away-from-home hardwood substitution which fibers lack pulp of producers the is of So office that see This recycled and by to by in to of example view for tissue. in in next that This from that push is beginning consequently by economies - opportunities in boosted interest recovery products, sense those the fiber. see globe, will recycled high see our peak traditionally and throughout for and with bigger due paper, virgin a one a of availability. their from is lack kind further. for starting softwood to

break cases In at stuck be solution terms next at full crew of logistics days quickly short-term constraints the least in the port. see impacting to the the and supply, no with congestion, for several ports still COVID throughout XX reinforcing, quarter getting bulk, we containers, vessels vessel occurring

is kind ongoing. this So of

weeks material Our that also RISI the few estimates. to and how as demand customers inventories by this supported happen unexpected mentioned, the from are challenges I downtimes, the reporting probable build better support to of up now raw will

Regarding information start-up their dates the the dates have. that you regarding or new same that are we projects, have the

but understand before a volume ramp-up official project, period that ramp-up be should the in as And - that will and this year. there markets add to we in to if which have we QX information, logistics the about we period. any talked this the arrive We volume, not constraints

plan 'XX. is fundamentals this see and So how the we the the for QX

Operator

De to would a question. Carlos Alba Mr. like make

Carlos De Alba

expect - - or in unfolding the is have geographical and highlighted, One you your you see great can vis-a-vis production, and on say your you trends And second on Chinese you a production maintenance you there. distribution quarter? us of I to of that questions. going that months the downtime just of on would you shipments, published Would general, that times just release? couple are scheduled you the see do you market in to in the the the pulp then or How coming give stick would the greater regular A some that to understand quarter proportion but cement pulp the you Asian to market-related - first if be potentially or sales. do forward it color don't give the prepared take gain would you guidance, your more order downtime

Leonardo Grimaldi

going question Okay. is here. your this mix. I'm Leo related Carlos, take to to geographical first

something quite as are from to and not on don't geographical a so now commercial understood But in immediate will basis second the kind mix question. for As Walter know, as effects to that is expect It's strategy. should future disclosing we we say our he quarter be past case. can sensitive of is you to difference second this that I normalize not much pass had I that what our your we can our quarters. these in answer year recurrent quarterly

Walter Schalka

Carlos, question. you, your for Thank

mention you any forecasting not to are to downtimes. market-related Just we that

normal for specific volumes had year to stage. production related we We downtimes same There before, on the expecting our We the certain we going downtimes do on any is and changes our at with keep that normal annual going the to not keep - pace plants at are are we usual our are XXXX. usual that maintenance. have total

Operator

Mr. Rafael to make question. Barcellos would a like

Rafael Barcellos

pulp my do And currently arrive see the follow-up new the prices. second on has that of is almost first moment? already we capacity end year at the question believe mean, And affecting XX% Spinnova. in of you is supplier negotiation? I Spinnova. you do price how to segment My that a this related the really question Suzano

mean, elaborate about to value you this you think we and in forward? how the adding Suzano strategic how this? of do see market, should how Spinnova could I about terms in So think going positioning on should we

Leonardo Grimaldi

that and Rafael, any from is what July that will to your - I or capacity that we to believe want were saw on in don't first is I correction in on this few new take weeks here. related start this And months anyhow the pulp in were are question now. pricing. that the a happened Leonardo you few the and previous And that fundamentals North markets in America, and are the to and which were very and at supportive, not related in levels as prices still at happened conditions North in supportive $X,XXX Europe know, present unchanged time, America. therefore, China. at Europe this €X,XXX correction pulp and

of order the is this constraints would next paper of up specific of Asia even it's at that of logistic pace it's questions again don't in my be therefore, project arriving you only I this of and news end have very or ramp-up everyone knowledge to regular incoming when So today beginning well. that the sales that of to think - the at the that I so to a fact upmost volumes QX plus the the reducing the to to very sentiment all the affected of channel by, margins being add in likely the that and time, actually compressing happen. new start-up back readjust like before probability one and in one the year, the due China this is mentioned again, we to and think as Market on capacity normal it because and with had intake the I into this pricing

think at don't market time. that's I the this affecting So

Marcelo Bacci

far this very but your the and production question the of Rafael, take is the comes low, that produce textile. It on going I'm when very a Spinnova. Marcelo technology to pulp is it Spinnova startup a it promising speaking. is way future second promising very use to the go to has is sense - and believer in sales that about valuation. understood the a company, IPO at has this are the company of technology. that to allow we today on Suzano public holds firm very market XX% the the of a after the in technology attractive so a

the this we're exclusive final is also products, and will that and that rights come coming to what into in it as which the strategy a And we're when will JV can Spinnova that the with in we together to we Suzano this the to technology We to technology have comes market putting use in incorporate that going textiles. producing years. have the develops, our start future technology in expect

Operator

would like make Ribeiro Mr. to question. a Caio

Caio Ribeiro

Thank question. you for my taking

have that exist regions Europe comment could you in for the will Do perspective. how just if between quarters, in a right, of bit look are on to you pulp the of quarters. above lot volumes secondly, see China looking coming for in Europe region? to And prices potential this seems lowering evolve pocket So the of like for pulp market, relative that the China the this do to coming first on a perspectives integrated the prices. see been that past one China a think incoming is just hold on be today see under to and in months will demand that gap longer? the the from growth price a little significant spread coming you strength I the additions projects could think and you seems how more reallocated wanted closing prices wanted potentially on from Or pulp supply that more then changing in all? you at Thank mills the seems that imported if be there longer the forward, to dependency demand see focus as pressure going term, I in you. it pulp.

Leonardo Grimaldi

Leo is This Caio. Okay, here.

half question way will again, happen that First, very And is again, the firm a around. opposite price and cannot how the how it and coming right? fundamentals, the correct, it And of strong will in market play also Asia, the and today, into incoming to obviously months, on next terms for how a second support what wait these But regions very future announcements government you America is of - we play weeks out volume in the the regions we only these in or talking them positive Most as closely of are on We to other. expectation We the is going back the and the that fundamentals evolve. what And that we the year, pricing. optimistic comment projects been and on that have the for Q&A, in integrated projects, the huge usually in or out regions. will there you when a QX. have all related demand announcements incentivized the that part in executed as I are positive during QX before depends should your about the probably of the among or compared price was are North sense nonintegrated half in to announcements that China questions difference increase Europe in my And but being and will between first of to see spreads prices same in there and way that, of one going lag not be will market by geographical pointing the and some follow projects And all and paper board the are China. mentioned. some have on Asia. and

if see all that are capability side executed, right? So reasons: and direction, that in about cover of for the up occur is much being side, pulp and of is to first even there And announcement. add cash you less restriction part main the due in doesn't Southeast this we that question going part because of enough much these the which cost on the projects wood announcements. and a if are the the the BCTMP the these side perspectives to and and positive on of curve, Obviously, big those more machines pulp sense on is good sense two Asia, for not availability the mills a are part in executed is huge paper to second happening. the very board will perspectives more growth However, future in in upper cost they of be we will it the make pulp projects in mills conservative pulp industry, pulp

Operator

[Operator Instructions]

Walter Schalka

join this my to speech we I us Understand, long-term like on getting you close thank the are have I very be to would to would just final perspective. session. to bring you to here. like for like end of session. think the to much I this would everyone I

several price during coming demand on and discussion and things supply realization, this quarters. questions was think and the with short-term the price impact price with related I in related

is that belief well-prepared company the firm is Our the for future.

world, We better about are producer future. and in be one cost sure lowest getting we even the will the of the that. for I'm

on coming performing these on for our our competitive our markets. fluff very extremely that on extremely We with verticalization and the each and that, project projects good paper, pulp competitiveness example stream expansion will on on showing a continue initiatives consumer very of new this is of future. production Cerrado We one market is still believe on goods well, our

that new on trees. life That our the our is projects, renewing purpose, coming from of continue tree. part will coming from is bio-products bio We

we a and and that future. of even we avenues We we more COPXX, continue very addressable the become future market areas, future. markets, doing after for and will that just for different enlarge Spinnova will are is will creating matter relevant example new our things believe this, for more the become the on of carbon on And are this different well-positioned relevant.

for to continue would protecting connected to creation a for Everyone critical time. all, very to have to deliver be the important very is much, everyone shareholders. and history. We and our are our flow with create very highest the And that, cash belief, are EBITDA delivering this that future we and society. continue hope vaccinated. Thank you This on quarter very very to will record connected is our is That other. be the record and for would each firm we Thank are all free you and good positive our This value on we value of us. shareholders.

Operator

Thank you. finished. Have conference a Suzano second nice call day. is quarter results

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