The Company reported operating income of $4.9 million for the first quarter of 2021, an improvement of $33.2 million from the reported operating loss of $28.3 million for the fourth quarter of 2020, reflecting improving global pulp market conditions, combined with a 25% increase in pulp production quarter-over-quarter. During the first quarter of 2021, global pulp markets experienced a surge in US-dollar list prices in response to an uptick in demand, particularly from China, combined with ongoing global logistic constraints and supported by strong price increases on the Shanghai Futures Exchange. As a result, Northern Bleached Softwood Kraft (“NBSK”) pulp list prices on orders from China saw sharp increases throughout the period, reaching a high of US$973 per tonne in March to average US$883 per tonne for the current quarter, up US$246 per tonne, or 39%, from the previous quarter. Prices to North America also saw sharp increases, although not at the same levels as those in China, up US$164 per tonne, or 14%, quarter-over-quarter to US$1,302 per tonne (before discounts). Reflecting the lag between orders and shipments, the significant majority of these price gains will be realized in the second quarter. NBSK pulp unit sales realizations reflected improved prices on shipments in the current period, which more than offset a 2 cent, or 3%, stronger Canadian dollar. Average Bleached Chemi-Thermo Mechanical Pulp (“BCTMP”) unit sales realizations were broadly in line with the previous quarter as more modest upward positive trends in BCTMP US-dollar pricing were largely offset by the stronger Canadian dollar.
Preem and RenFuel are assessing, in collaboration with Rottneros, the construction of the world’s first lignin plant for biofuels, at the pulp mill in Vallvik, Söderhamn. The plant is expected to produce an annual volume of 25,000-30,000 tonnes of lignin, and will be completed in 2021.
The collaboration between the companies means that Preem will be the first fuel manufacturer in Sweden to use lignin in its production. Via the company Lignolproduktion AB, which is jointly owned by Preem and RenFuel, the aim is to reach a total annual production capacity of 300,000-500,000 tonnes of lignin, based on the assumption that more plants similar to that in Vallvik are established in the future.
“Lignin can be refined to create both renewable diesel and renewable petrol, and used in all vehicles. Lignin, like tall oil, will help us phase out fossil fuels to an even greater extent. It is a valuable raw material in our renewable fuel efforts, and is based on by-products from the Swedish forestry industry. It is also available in large volumes,” says Petter Holland, Managing Director of Preem.
“RenFuel’s lignin oil, Lignol, has considerable climate benefits and is a key factor in achieving Sweden’s goal of the transport sector reducing its fossil emissions by 70 percent between 2010 and 2030. Lignol makes today’s petrol and diesel cars clean vehicles. All current vehicles can run on this type of fuel,” says Sven Löchen, Managing Director of RenFuel, who also considers there to be major export opportunities for this innovation, to countries that, like Sweden, have good access to well-established forestry production.
Deliveries of samples of lignin from Rottneros’s pulp mill in Vallvik are already being made to Renfuel’s pilot facility, which was established for the production of Lignol with the assistance of the Swedish Energy Agency. The Lignol oil is then taken to Preem’s refineries, where the raw material is processed to make biofuels.
“Rottneros is keen to contribute to strengthening Sweden’s bioeconomy, in which the pulp industry is already a key element. In addition to contributing to the transport sector’s shift to become fossil free, the extraction of lignin also gives us the opportunity to increase our pulp production. This ensures that all parties benefit from the collaboration,” says Ragnar Lundberg, VP Technology at Rottneros.
In 2017, approximately 9,000,000 cubic metres of fuel were sold in Sweden, of which about 1,900,000 cubic metres were classified as biofuel, according to the Swedish Petroleum and Biofuels Institute (SPBI). About 15 percent of the biofuel was produced in Sweden, with the rest being imported from other countries.