Ladies and gentlemen, thank you for joining us for Suzano’s Conference Call to discuss the results for the Fourth Quarter of 2021. All participants will be in a listen-only mode during the presentation led by our CEO, Mr. Walter Schalka, and other Executive Officers. Following the company's remarks, there will be a question-and-answer session with further instructions provided. Please note that any forward-looking statements are based on Suzano’s Management beliefs and assumptions, along with currently available information. These statements involve risks, uncertainties, and assumptions, as they pertain to future events that may or may not happen. It's important to recognize that general economic conditions, industry conditions, and other operational factors could impact Suzano’s future results, possibly leading to actual outcomes that differ significantly from the predictions made in those forward-looking statements. Now, I will turn the floor over to our CEO, Mr. Walter Schalka.

Good morning everyone. It is a great pleasure to have you here with us to discuss the fourth quarter results and annual results of Suzano. I'm very pleased to have with us today the major part of our team and please, if you want to have any kind of questions, please be prepared to give it to all of us. I would like to share with you that I'm very proud of the results of 2021 of Suzano. I would like to thank here publicly all of our 16,000 employees and our leadership that delivered an all-time high results of our history. And not only that, we are preparing the company for the future as well. We had extremely good volumes on both last year. Paper has the outstanding results as Fab is going to share with us. We are able to deliver almost R$23.5 billion of EBITDA last year and that was extremely positive and could allow us to reduce our net debt from $12.3 billion to $10.4 billion last year, almost $1.9 billion reduction. We did have impact on inflation, and then our cash cost was impacted from our budget and from the previous year, but we are preparing the company for the future. We have extremely good position on liquidity at this point in time and our leverage right now is 2.4 times net debt over EBITDA. More important than the results that we had is that we are preparing the company for the next coming years. As you may know, we have five different strategic avenues and we are pursuing all of them. We are, on a structural basis, continuing to reduce our cost for the next coming years. We've had retrofits in some of our plants with the new projects they had, and in addition to that, with extremely important development on the forest side on the reduction of the average wages from the forest to the plant. We have continued to keep our relevance in the pulp market with our new projects ahead. Aires is going to share with us about this project, information about this project. We continue to have vertical integration as part of our strategy, the fluff market has been performing extremely well. We have been working on the consumer goods that have been doing well and the paper did all-time results last year, as Fab is going to share. Our perception is that our ability to adapt is critical for us and then we have the new addressable markets for the future. We are delivering new opportunities. One example is the spinoff that last year had their IPO with extremely good acceptance of the market. And we continue to play a very important leading sustainability role for the future and cardboard markets will become even more important for the future. Now, I'm going to pass it to Christina, who is going to share our views about ESG in the last year and for the coming years.

Thank you, Walter. Good morning, everybody. 2021 was a year of continuity and ambition elevation. On the environmental front, we are again pioneers in unique and breakthrough major conservation goals. We established biodiversity corridors goals and to our knowledge, we are the only company with a target of such nature. On the climate change front, which is so essential to our business strategy, we are raising our own bar. We adhered to the science based target initiative and the Business Ambition for 1.5 degrees. And very importantly, recognizing the imminence of climate change, we anticipated our carbon removal target from 2030 to 2025. On social issues, we're cognizant of the role that companies can play in equalizing society, and Suzano has given a central place to diversity and inclusion. In that sense, we aim to have at least 50% of racial and/or gender diversity in the final hiring stages aligned with our long-term commitments. I am very proud to share that diversity and inclusion is a target for 100% of the people in leadership positions, impacting their variable compensation. Again, this shows that Suzano can be a trendsetter. In our shared value approach, we made very significant progress in the achievement of our long-term poverty reduction goal. In addition, Suzano's programs and projects have had a domino effect in doubling income generation. Sustainable companies have good governance and progress on this front is a necessary lever and catalyzer for progress on the environmental and social pillars. In that sense, we formalized practices that were already occurring, establishing far more responsibility for ESG and risk management, mandatory throughout the performance evaluation of board members and minimum attendance. Finally, I would like to highlight the celebration of worthy achievements of Suzano from last year. Good signals how we have increased sustainability embeddedness in our business strategy and operation as well as our evolution and transparency. We raised $3.1 billion in sustainability-linked bonds and sustainability-linked loans. This has been tied to greenhouse gas emissions, intensity reduction, the reduction of our industrial water use and diversity and inclusion targets, specifically increasing women in leadership positions. As of December 2021, our debt linked to ESG is almost 40% of the company's total debt. Suzano also saw in June our first ESG call, a quantum leap to enhance engagement with our stakeholders. And finally, on the ESG indexes and ratings, I want to highlight and celebrate that Suzano reached an A minus in all three carbon disclosure project questionnaires: water, climate, and forest. We have moved up from a B score. So that's on the sustainability front and now we're going to speak of our paper business, so over to you Fabio Almeida.

Thanks, Cristina, and good morning everyone. The paper and packaging business unit has delivered a solid performance in the fourth quarter of 2021, despite operational constraints and inflationary headwinds, closing 2021 with a record EBITDA for the business mix. Demand for paper grade products has been strong in the domestic and international markets served by Suzano. Supported by solid demand, restrictions on the supply side going through logistics bottlenecks, and the need to recomposing margins due to raw materials, energy and logistics inflation, our paper prices have risen in all markets and across all paper grades. According to EBA, print and write demand in Brazil has grown 6% in the fourth quarter of 2021 when compared to the same period of 2020. For the full year, demand has grown 19%, boosted by the easing of pandemic controls and the usage of offset paper for packaging purposes. Paperboard demand has shrunk 6.3% in the fourth quarter on a year-over-year basis, given the strong comparisons of the year 2020 when the market was rebuilding its inventory. For the year, demand for paperboard grew 10% above historical trends. We have also seen solid demand for paper products in Latin America, North America and Europe. In this context, our Q4 sales volumes were 4.3% higher than 2020 and in line with the pre-pandemic levels. Domestic sales represented 72% of our total sales in the quarter, a 5% increase compared to the same quarter of 2020. On a quarter-over-quarter basis, our domestic sales improved 16% in volume due to better seasonality and the continued strong demand for packaging papers. Our net price during the quarter was 4% higher than our average price in Q3 2021 and 25% higher than Q4 2020. During the period, Suzano has successfully implemented the previously announced price increases for product lines and markets. We have also announced new price increases during Q4 which will be implemented over the next month. As a result of strong volumes and prices, revenue management, and operational stability, our EBITDA has reached a new all-time high of R$552 million in the quarter, a 35% increase compared to the fourth quarter 2020 and a 44% increase on a year-over-year basis. Looking ahead, our major short-term challenges remain minimized by the pressure of inflation and overcoming the continuous logistics disruptions. Regarding our continuous focus on operational efficiency, we strengthened our unique go-to-market strategy, reaching even more customers with our e-commerce platform, which already accounts for 24% of our total revenues, and 64% when considered for medium and small-sized customers. As an important milestone, sales of new products by Suzano grew about 10 times when compared to the full year 2021 with full year 2020, aligned with our strategy to expand our addressable market and offer more sustainable packaging solutions to our customers and end users. Now I will turn over to Leo, who will be presenting our Pulp business results.

Thanks, Fabio, and good morning, everyone. Let's please move to Page 6 of our presentation. The results of our pulp business were again strong in the fourth quarter 2021, with robust sales volumes despite all logistic challenges. Price realization during the best quarters, combined with strong sales performance during the year, brought us to the record EBITDA for our pulp business unit since the merger. As you will note on the top graph, our sales performance totaled 2.7 million tons in the fourth quarter 2021, exceeding our sales volume in Q3 2021 and also in Q4 2020. I would like to emphasize that the great job of our sales and operational teams was crucial to reach such sales volumes while maintaining our service levels to our customers despite all supply chain bottlenecks and tight inventories. The fourth quarter was marked by significant tightening of the supply-demand balance as a consequence of not only supply chain constraints all over the world but also as a consequence of pulp demand, which has exceeded our expectations across all paper grades in Europe and North America, and also in China, where demand for hardwood pulp from our customers has stopped at historic levels, but still not enough to rebuild their inventories to comfortable levels. The tightening of the supply-and-demand balance, combined with inflation on input and manufacturing costs for pulp producers globally, especially on higher-cost mills, has set a new threshold for marginal-cost producers, favoring the pricing momentum, which we started to see in China and Southeast Asia during the second half of the past quarter. According to the Europe Pulp Association, the pulp inventories at European ports closed the quarter at 1.1 million tons, 12% below the third quarter 2021, and more than 20% below historic monthly averages since 2018, placing challenges for paper and paperboard producers who are running at high operating rates. In China, according to SEI Consultants, the pulp inventories at ports fell to 1.6 million tons, which is a 15% reduction compared to November, almost a 300,000 tons reduction in just one quarter and a 12% reduction compared to the third quarter 2021. Our average price for export markets for the quarter reached $630 per ton, a 3% reduction versus our Q3 prices, which is a combination of stable prices in Europe and Americans with lower invoice prices in Asia during the quarter. Currency depreciation had a positive effect on our prices in real terms, which increased by 3% during the quarter. Our consolidated 2021 price of $613 per ton was 32% higher than our 2020 price, or 30% higher in real terms. Now looking at our EBITDA performance, we reached a new all-time high during the quarter, bringing our 2021 EBITDA to a record of R$21.4 billion with a 62% EBITDA margin, as mentioned, favored by increasing prices, FX stabilization, and solid sales volumes despite higher production costs. Looking forward, I would like to bring your attention to the following points. By analyzing the Brazilian Exports and Development Ministry statistics for hardwood pulp exports in 2021, it is possible to note that exports to China were reduced by almost 800,000 tons during the year, which were mainly reverted to the European market. Most of this reduction in shipments was concentrated in the third and fourth quarters for which the impact is yet not fully reflected in China's pulp availability and inventories. There is also a concentration of maintenance downtimes in the first quarter, which added to all unplanned downtimes, some of which are supply chain-related, impacting raw materials, which should result in unexpected curtailments in bleach chemical pulp that will exceed 1 million tons in just one quarter. As a consequence of current price gaps between different regions of the world, we believe that most of these supply shocks will continue to be felt in China. Additionally, price differentials that favor fluff pulp and favor dissolving pulp should keep all flex capacity directed towards these grades. As the supply curtailments that I mentioned should be even more intensified by the challenging logistics scenario globally, we expect that the supply and demand fundamentals will continue to be quite favorable and supportive during the next months. With that said, I would now like to invite Aires to present our cash cost performance for the quarter.

Thank you, Leo. Good morning everyone. Moving on to Slide 7, the fourth quarter 2021 cash cost performance, both quarter-over-quarter and year-over-year continued to be impacted by commodity inflation, especially on chemicals and raw materials, which mainly affect input costs, and the wood costs on harvesting and transportation activities. Some chemicals and stock prices also took a toll again on our performance. As you can see, the impact of commodity price alone accounted for 86% of total cash cost pressure in the last quarter and more than 6% on the 2021 performance. It is also worth mentioning that the quarter-over-quarter cash cost increase of 5% was in line with our forecast. Our strategy in the energy market in the context of the water crisis late last year resulted in a high benefit on the cash costs compared to the previous quarter, partially offsetting the exogenous headwinds already mentioned. For the coming quarter, commodity impacts continue to be challenging. Prices have recently reached the highest levels since 2014 and will continue to impact input costs and fuels. In this context, we foresee pulp cash costs, ex-downtimes, moving north and could reach high single digits or low double-digits in the first quarter, reaching its peak for 2022. The first quarter will also be marked by a large number of scheduled maintenance downtimes at our mills, which will represent approximately R$85 million impact on total cash production costs. Before turning to Marcelo Bacci, who will continue the presentation, I want to emphasize that Suzano keeps focused on the modernization projects in its mills to further enhance the structural efficiencies in the longer run.

Thank you, Aires, and good morning everyone. Moving to Page 8, we show that Q4 was another period of very strong cash generation and as a consequence of further deleveraging of our company. We have now reached a nominal net debt of $10.4 billion, which is $1.8 billion below the number from one year ago, and that caused the leverage reduction from 4.2 to 2.4 times during the year, which is very significant. We have been able to reduce our net debt not only by $1.8 billion, but by 1.8 times EBITDA during the year. It's a remarkable performance. Our debt amortization schedule is very light for the coming three years and we have now enhanced even more our liquidity position with the new revolving credit facility that was increased from $500 million to $1.27 billion that we recently announced. Moving to Page 9, we see our hedging portfolio. We've been taking advantage of the currency markets to improve continuously the quality of our portfolio. We now have an average for our normal portfolio of cash flow hedges with an average put of 5.49 and an average call of 6.47, covering 70% of the gap, the currency gap we have for the coming 18 months. In addition to that, we have started building a longer book of hedges for the Cerrado Project that already has about $500 million in notional value with an average put of 6 or 7 and an average call of 7.66. This portfolio gives us a lot of protection, very relevant protection against the potential appreciation of the currency. Moving to Page 10, we show that we closed 2021 with a CapEx figure of R$6.3 billion which was in line with the guidance we've given to the market. We reaffirm the CapEx program of R$13.6 billion for 2022, of which R$7.3 billion are related to the Cerrado Project and that is specifically the next topic that Aires will cover for us.

Thank you, Marcelo. Although facing an adverse global scenario due to the COVID-19 pandemic and unprecedented supply chain disruptions in the last decade, the Cerrado Project is advancing as planned, being on time and on budget. The picture on Slide 11 shows the new site started in the end of the fourth quarter 2021. As important milestones in the quarter, we can highlight the progress of 8% of site work effort, which is crucial for the subsequent works in the rainy season. The conclusion of negotiations for a new chemical plant is also noted, and the agreements on how to transport the future pulp volumes through the planned logistics are in place.

Well, I'd like to leave the major takeaways to you that is in the last page of the presentation. Despite the COVID situation, inflation, and supply chain challenges that we had last year, we have noted outstanding performance in every single part of our operations, achieving record results and a very strong balance sheet for the future, preparing for our major investment program that we have ahead of us. But we also have a major improvement in ESG and in creating value for our shareholders, just remembering that we converted that to equity in $1.8 billion, as Marcelo mentioned. That means almost $1.5 per share on conversion from debt to equity. In addition to that, we have the Cerrado project that is on time and on budget and will deliver significant value creation to our shareholders as well. Our perception is that we are addressing all five different strategic avenues in a very positive way. Before we start the Q&A session, I'd like to invite everyone to join us on March 13, to our Annual Suzano Day, that is going to be in a few weeks from now on March 30. So that's an open invitation for you to join us on this session. Now let's go for the Q&A session.

Thank you. The first question comes from Rafael Barcellos with Santander.

Hello everyone, thanks for taking my questions. My first question is about pulp prices, I mean could you please comment on the implementation of the $50 price hike and also for February orders? And other than that, what do you expect in terms of demand after the Chinese New Year? And my second question is about your strategic view on Suzano's operations. I mean, some printing and writing producers have been shifting production to packaging grades, so do you think Suzano could do something similar with its paper division? And other than that, on the pulp division side, do you think Suzano could shift some hardwood pulp production to niche markets like fluff or even sold in pulp, and of course, I mean, here I'm talking about the good news that you have higher cash cost, right? Thank you.

Rafael, good morning. Thank you for your questions. I'm going to start with the one related to pulp prices; before coming into February because obviously as we're still in the middle of the month, we cannot disclose our effectiveness to date. I would like to just reinforce what went on in January as we closed this month. In January, we had maintained our prices stable in North America, the Americas and in Europe. In China, our price increase of $30 was completely implemented with no discounts whatsoever. As you know, we have announced now for February a $50 increase for all of the Asian market, $30 in Europe, and $40 in North America. We are very confident of a successful implementation due to all the favorable supply-and-demand scenario which I have mentioned in my opening speech. In terms of demand in China, post-Chinese New Year, we see the following. First of all, this is usually a big season for paper and board demand, a lot of activity, a lot of publishing and scholastic activity which demands paper and board products. We have seen that the paper and board stocks are decreasing. We still do not have the January numbers, but the December numbers indicated that the closing figures in China showed that the final paper and board stocks were 6% lower than the third quarter 2021. So the stocks are quite low for paper and boards as well. Our customers are reporting that downstream demand is quite healthy. We see that the COVID control actions in China are becoming more flexible, and that the opening of other Southeast Asian economies should support better demand and exports from China. Actually, exports from China of paper and board have been increasing directly in paper and board itself and also indirectly in finished products from China and we have seen a positive demand so far. And just to recap, all consulting companies are seeing a positive year in China right now, tissue with a 4% growth and board with an impressive 7% growth compared to last year.

Thank you very much, Rafael for your question. I'm going to take the second question regarding our paper business for the future and the potential conversion of machines. We do believe that the printing and writing market will continue to experience a secular decline in the coming years, which will create one more balanced situation. We currently have a very tight global market at this point in time. Since we have had a lot of conversions and we have some improvements on the demand as well, we are very pleased that the market is very tight at this point in time. We are serving our customers and performing our agreements properly. On the other hand, we are not considering converting any of our facilities or plants to other grades of paper. We have been growing in the fluff market. We are very pleased with the development that we are doing. I would like just to remind you that 12 years ago, the fluff project was just a PowerPoint presentation, and right now we are performing extremely well. We are working at full capacity. We have several customers on all of the continents right now. We have large customers moving from long fiber to short fiber or combined fibers as well, which is very positive, and we are discussing internally what would be the next step that we are going to take in the fluff market. Thank you.

Okay, thank you.

Good morning, everyone. Thanks for the opportunity. My first question is if you have any updates on the certification process of carbon credits. You mentioned last year that you had identified projects that could translate into close to 20 million tons of CO2 certified equivalent credits. So, I’d like to understand how this process is developing? And my second question is for Aires if you could comment a bit on your view for your cash cost performance in 2022 compared to the 4Q 2021 level. Is there more pressure from raw materials coming from overall inflation that will pressure your results, or do you think that most of that is behind us, and we could see relatively stable cash costs going forward? Thank you.

Thank you, Daniel. I’m glad to take your first question related to the carbon global market. I think it’s very clear to us that this is going to be the way of financing the decarbonization of the world. We are going to see that through a cap-and-trade system worldwide, that carbon price will go up in the next coming years, and this will allow the companies that would be making additionalities in terms of reductions on their carbon emissions or carbon sequestration that could be monetized. We have been going through a certification of our credits on one side and waiting for the new law in Brazil that allows for the negotiations of this. We hope that this will happen during this year and it would create a new opportunity for our shareholders to monetize this important value on carbon credits in the coming years. Now I'm going to pass to Aires.

Hi Daniel. Thank you for your question. We believe that we are experiencing in cash costs a cycle momentum, especially with the lag of commodity price. Probably all of our first quarter will be the worst of the cycle to be affected mainly by grants that have seen the highest levels in the last 10 years. We have a large number of scheduled downtimes this year, and we believe that after the first quarter, especially in the fields, we will experience some reduction that will turn our cash costs back to normal levels slowly but continuously until the end of this year.

Yes, good morning, everyone. Thank you. My first question is on the supply picture for pulp this year. There seems to be a big divide in the market on expectations. Some think there will be major oversupply coming from all these additions and others that are hearing that margins have significantly increased due to slower supply, a series of maintenance, stoppages, strikes. So, I just wanted to hear from you, what your expectations are for supply, especially in light of some of the issues regarding logistics globally in the supply chain? And the second question is a bit more specific, and I apologize for that, but for Bacci to help us out. I mean, looking through the cash flow numbers, right, Suzano has two cash flow drags, right, which aren’t new, but could potentially be shifting over the next quarter, right? First on the derivatives, right, Bacci? I mean, the company was criticized by the market over the past years, and of course, things didn't play out accordingly, given the currency movements, the sharp currency movements and the losses. We're now at a level where the BRL could potentially be appreciating going forward. There already is a significant interest rate differential here in Brazil versus abroad. So how do you see these expenses, these derivative expenses going forward? I mean, do you see a potential reversal over the next quarters? And I'm also referring to the numbers specifically on leases, right? I mean, I noticed that these numbers have been increasing over the past couple of quarters, so just wanted to hear your thoughts on that as well. Thank you.

Hi Leo, good morning. Thank you for your question. I’m going to address the supply side. At the moment, the supply-demand balance is very supportive, and looking at the full year 2022, which I think relates to your question, we will have to follow the dynamics and fundamentals as they play out in the next month. I would like to highlight two main points. First of all, all the project delays which were recently announced are favorable, and when we couple that with the logistic constraints, we will see a reflection of a slower time to market for new pulp. This means that the volumes coming in will be more gradual and balanced. When we add to that the increasing unexpected downtimes as you've mentioned, some of which are supply chain-related impacting raw materials, our analysis of the supply and demand for 2022 shows a much improved scenario. Most market consultancies have already revised their numbers and now are reporting operating rates for 2022 which vary between 90% and 92%. This indicates a quite healthy and supportive market. The price gap between dissolving pulp and fluff should favor the utilization of flex capacity towards these grades. Last but not least, we are engaging in ongoing projects with print owners to develop sustainable alternatives to single-use plastics, which will increase the demand for hardwood and bleach chemical pulp as well.

Hello, Marcelo speaking. On the derivative side, you know that we have a policy that is well known by the market and that we’ve been applying consistently over the years. We now have a portfolio of about $4 billion of cash flow hedges covering the next 18 months. As I showed in the numbers, we are protecting ourselves very well from potential appreciation of the currency. We don't take any bets or views on the currency; we just apply consistently the policy. If the real continues to appreciate, we will have reasonable protection because, at the end of the day, a more appreciated currency is negative for the company. The function of the hedging portfolio is to give a protection which will always be partial against that. On the leases side, the number of lease payments is increasing over time for two reasons. One is that we are improving and increasing the size of our forestry base and part of that is on leased land, and also we've been increasing the number of ships or vessels that we lease for our own use as dedicated vessels. So this is improving the quality of our operations both on the forestry and on the shipping side, and of course, the cost for that is in the form of lease payments that is increasing over time.

Perfect, thank you.

Thank you. Good morning, everyone. A couple of questions here. The first one to Grimaldi. Grimaldi, could you comment specifically on the dissolving wood pulp market? You mentioned the spreads are pretty high versus hardwood pulp and other pulp rates. Do you see any sawing mills that have not yet shifted to the dissolving pulp market that might shift in the near term? That's more of a general question. And within that same question, specifically about Brazil, do you think this is likely to shift to dissolving wood pulp in the near term? I just would like to hear your views there? The second question is for Bacci, Bacci, the receivables, accounts receivables were pretty high in the fourth quarter. Should we expect that access to be fully reversed now in the first quarter, just to understand the dynamics there? Thank you.

Hi Thiago, good morning and thank you for your questions. On the dissolving side, what we see is the following. There is close to 7 million tons, 7.5 million tons capacity of dissolving pulp in the world of which roughly 28% to 38% is max capacity. At this time, with this big gap in prices that exceed $300, we believe obviously we're not completely sure of that because we don't have information on our competition's decisions. But we believe that most of this flex capacity is being used for dissolving pulp and not as paper grade pulp. Regarding your questions about ourselves, we cannot comment much. All our information is the public information, which is exactly the same one that you have. So I will not be able to help you much in that sense.

Thiago, regarding the receivables side, we have, as you know, the normal concentration of sales at the end of the quarter, and that created a situation where the normal sale of receivables that we do was delayed. At this point, we have already done that, but it caused an increase in receivables at the end of the quarter and that should normalize.

Yes, good morning, everyone. Thank you very much for the presentation. Just a few questions on my end, also looking at the results, SG&A increased more than what we were expecting, but also looking at the prior quarters, it was also higher year-on-year, and quarter-on-quarter. So what should we expect there in terms of going forward the level of a more normalized level of results? And then coming back to the market, paper prices increased in the fourth quarter, as was said before, and you expect these increases to be implemented in the coming quarters, I think I understood that. So could you maybe give us more color as to why the lag between the announcement and the price implementation? And if you could remind us of the level of prices and for what products you increased those? And then finally, sorry for squeezing a third question in there, Bacci, is there any pattern or concentration of capital spending in a particular semester or quarter in the year? That will be quite useful. Thank you.

Carlos, thank you for your questions. On the SG&A side, we have two effects during the fourth quarter. It is normally when we adjust our provision for variable compensation, and we don't know the performance for the year until we approach the end of it. It was similar at the end of 2020. So when you compare to the previous quarter, you have basically the difference of this additional provision. On a year-over-year basis, we have inflationary effects that were partially compensated by efficiency gains, but there was still some effect. Looking forward, we expect these inflationary pressures to continue, but we are working to compensate that with more efficiency. On the CapEx side, we normally have some concentration in the first quarter, but this year with the Cerrado project, we will probably have a more stable performance of CapEx over the year with lower specific concentrations.

Carlos, it's Fabio here. Thanks for your question. Regarding paper price, yes, our paper prices have risen 9% in dollar terms in our export markets in the fourth quarter, and we were quite stable in the domestic market, mainly due to such seasonality. As you know, we have a large volume that goes to the federal books program and we sell that in reals and in long-term contracts, which is why in the fourth quarter the domestic market prices were stable. We announced a price increase for coated wood-free for the domestic market, a 35% increase, which we believe will be implemented in installments during the next months because of contracts and we need to wait for their term for the price to kick in. We have also increased prices in North America by 9%, effective March 2022.

Well, thanks. Good morning, everyone. I have a couple of follow-ups. First of all, on the supply chain bottlenecks. I'm quite surprised to see Suzano being able to deliver strong volumes in a period that is supposed to be very challenging, so that probably proves that your supply chain is more reliable than most. I just wanted to understand if you can expect that to continue over the next few quarters and if you're seeing any signs of improvement in terms of supply chain needs and supply risk in the short term, considering pulp logistics and international shipping as well. And the second question; you did mention that China's momentum has been quite strong. One of the things that have been noticed is that paper prices in China have hardly reacted to the very high inflationary cost environment that we have, not only in China but also in chemicals, logistics and fuels. I'm trying to understand how we see paper price momentum in China picking up in the next few quarters versus your comments on low inventories and very high demand for the region. Thanks.

Okay, Marcio, good morning. This is Leo here and thanks for your question. The line was not that clear, so if I don't answer correctly, just feel free to follow up. On the supply chain side, we actually see the situation worsening in this first quarter of the year due to a lot of COVID contaminations in ship crews and also in port congestions throughout the world. Therefore, we see the tightening making the whole situation even more challenging. At this time, we don't see significant improvements, at least until the first half of 2022, which could easily run until the end of the year while maintaining pulp availability under pressure, as it is today. There's also a factor of supply chain that we are following closely, which is the truck and rail car situations in several regions like Europe, the U.S. and especially Canada, where we are tracking local strikes that can impact further supply of wood and raw material to pulp producers and tighten the market. COVID is also impacting the Chinese ports. Today, the Chinese ports are operating under closed-loop systems, with no one coming in or out, and there are a limited number of pilots who bring the vessels to berth, delaying unloading operations by anywhere from 7 to 15 days. So the situation is quite troubling at the moment. We are struggling to maintain our high service levels with customers. I believe your second question was related to pricing and the margins of the paper producers in China amidst inflationary pressure. This is indeed one of the KPIs that we monitor closely. We saw price increases going on at the end of last year, especially leading into the Chinese New Year. Our sources indicate that with the Chinese New Year, a price increase of RMB200 was implemented at roughly 60% to 70%. There is a strong belief that as we enter the strong peak season, that increase will fully materialize by the end of February. Our customers are already planning further price increases for the next months, which we believe is very reasonable because, currently, the sentiment in the Chinese market suggests that there is no room to speculate against rising pulp and raw material costs. Therefore, prices have to rise to support these costs. It's also important to mention that we track this margin, which reached, or not, actually margin, but the spread between their prices and pulp prices has reached a lowest gap in mid-2021 and has been recovering ever since. Today, tissue paper, printing & writing papers, and board prices are trending well above average historical values. As a reference, the spread between tissue prices and pulp prices has increased by 300% since mid-2021. So the entire chain is much healthier than it was a couple of quarters ago.

Yes, hi. Good morning, everyone. Thank you for the opportunity. So going back to the pulp price hikes, just wanted to see how likely another pulp price hike in China for March is in your view? And also, on this topic, in the recent past, we've seen papermakers in China struggling to recompose margins during times of fast-rising pulp prices and we observed that last year. I know you mentioned that paper makers are hiking prices and there are expectations of further paper price hikes ahead, but would you wait for those prices to move up and for the implementation to be successful before announcing another pulp price hike? And then secondly, returning to pulp cash costs per ton, I just wanted to see if longer term, whether that target you had by 2024 of R$560 per ton is still achievable? Thank you.

Yes, Caio, good morning and thanks for your question. This is Leonardo here. The first part of your question relates to future prices. We obviously cannot divulge much detail, as this interferes with our commercial strategy and tactics for the coming months. However, we can say that the short-term supply and demand fundamentals for the next months are supportive. Looking at the resale prices and the prices that Chinese and Asian producers are selling in their markets, we note a gap of more than $100 over locally imported pulp prices. This is also indicative of what can come into play. Regarding the customers, we update the composition of margins. As I mentioned in the previous question, it is a key variable that we monitor and follow. We want to ensure that the entire chain is healthy and fully supported, but I cannot comment on more specifics as this is part of our commercial strategy regarding the timing of future increases.

Hi Caio, thanks for your question. As we have done annually, we break things down at our total service operation costs at our next Annual Day at the end of March.

Just to complement the answer, it's very important that we have been working on the structural long-term reduction of our costs through several actions like planned retrofits and increasing our land base and our forest activities close to our plants, and these allow us to have lower costs in the future. In the short term, we are going to give more transparency to you during the March 30 Suzano Day.

Good morning, everyone. Thanks for the opportunity. I have a question for Leo, can you please comment on the overall level of pulp inventories at the end of the year? You said that inventories declined on a quarterly basis and according to our calculations, inventories are down to the lowest level since 2018, so I just wanted to check if you can see this may be leading to a weaker sales performance in the coming quarters, especially with the amount of maintenance downtimes happening at the moment? Thank you very much.

Thanks Cadu. Thanks for your question. Just to revise what I said in my speech, we have obviously seen and this is public information that European stocks were down at the end of the year according to the European Pulp Association at 1.1 million tons, we think this is below optimum. Especially in this challenging supply chain situation that we see in Europe with slower discharge and internal logistics while producers are running at very high operating rates. An additional insight from our market sources anticipates further inventory reductions in January, and we are following what’s going on in Italian ports, which are a good representation of the situation in Europe. Indeed, expectations suggest a new 6% reduction of stocks by the end of January, whenever the numbers are public. We also see that in China, which saw a stock level of 1.6 million tons at the end of the year and anticipated a new reduction of 5% in January. Therefore, our expectations point towards a tight supply and demand situation. Yes, we have our inventory position. However, we cannot give a lot of guidance because it relates to our commercial policy. What we have been saying is that our sales performance versus production numbers indicates low stock levels. We are keeping the stock low to support long-term commitments and maintain high service levels with customers. So our current stocks remain below optimum operational levels.

As there are no more questions, I would like to turn the floor over to the company CEO for final considerations. Please Mr. Walter Schalka, you may proceed.

I would like to thank all of you for joining us in this session. I think it was a very interesting discussion. I would like to relate our vision of the future. We are impacting not only the 2 billion customers that we have every single month with our products, but we are in fact influencing society as a whole with 8 billion people regarding two major issues that we have in our society: how we are going to address climate change on one side, and how we are going to address inequalities and diversity and inclusion that are quite necessary. I'm very pleased that we have been evolving with our numbers and we will share this information with you at the proper time regarding all of our future ESG targets. We have been developing the company and preparing it for the future as well. We have created value for our shareholders, but we are also sharing value with all stakeholders, which is very positive as part of our culture. We continue to develop our activities and move forward. Suzano is very well prepared for the future, but we must continue to progress and transform into a better company that can positively impact society. Thank you very much for joining us, and have a very happy day.

Suzano's fourth-quarter results conference call is finished. Have a nice day.