Ladies and gentlemen, thank you for holding, and welcome to Suzano's conference call to discuss the results for the Second Quarter of 2022. [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 depend on circumstances that may or may not occur in the future. You should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Suzano and could cause results to differ materially from those expressed in such forward-looking statements. Now I would like to turn the floor over to the company's CEO. Please, Mr. Walter Schalka, you may proceed.

Good morning, good afternoon, good evening to our colleagues over the world. Welcome to the second quarter results discussions of Suzano. I'm pleased to have with us here all the C level of the organization in the Q&A session. Feel free to ask us about everything on the company. I learned in the past that happiness is equal to results less expectations. I would like to -- despite of the reviews of the sell-side analysts that we are in line with the results, we are very pleased to announce outstanding results of the company. I'm very pleased to announce that to everyone. We have -- and I'm going to highlight several KPIs of the organization over the last quarter. First, in terms of the pulp volumes, we had almost 2.7 million tons of sales on pulp. Leo is going to address this issue with you in his part of the presentation. On the paper side, we have extremely good volumes, around 290,000 tons on paper. And Fabio will share with you. We would like to tell you that we reached BRL 6.3 billion on EBITDA this quarter with operating cash flow of BRL 5.1 billion. Aires is going to share with you as well our efforts. Despite of the inflation that we are facing, we have kept the cash cost in line with the previous quarter. Our liquidity position is $5.2 billion at this point of time with a very robust balance sheet. And our net debt, despite of the fact that we had dividends, we have cash returns on buyback program, we have Parkia, there is BRL 1.7 billion, we had Cerrado, we were able to keep -- to get the net debt at the same level of the previous quarter with $10.5 billion. Our leverage right now is 2.3x. And we are not going to share any further detail on the Cerrado project to date, but the good news is that we are on time, on budget. With the project with the physical progress on 21% in line with the expectations over the -- sorry, in defense that we have right now, we are developing on a very good pace at this point of time, keeping the same previous projection that we forecast that we are going to have our commissioning period on the second -- sorry, on the second half of 2024. Now I'm going to pass to Fabio that is going to share our view on Paper and Packaging business.

Thanks, Walter. Good morning, everyone. Let's turn to the next page on the presentation. Today, I'm glad to share with you that the Paper and Packaging business unit, through a combination of operational excellence and assertive pricing management, has had its best quarter ever. As we have seen in previous quarters, demand for print and writing papers and carton bar has continued to be solid in the domestic and international markets served by Suzano. Paper supply has been limited by logistics bottlenecks, which has continuously imposed operational challenge in shipping, terminal operations and inland logistics. In most markets, demand recovery has been capped by limited supply for certain paper grades. Moving forward, we continue to see inflationary pressures over paper producers' cash costs. Figures for the whole Q2 from IBA related to print and writing domestic demand are yet not published. Considering the first 2 months of the second quarter when compared to the same period of 2021, the available data shows a 4.6% decline, mainly due to an impact of 29% drop of imported paper as well as a reduction of sales of paper directed to the containerboard market. When looking only to print and write applications, we estimate that local sales have increased 11% year-over-year. IBA's public data on paperboard demand shows a 3% shrunk in the first 2 months of the second quarter of 2022 given the strong comparison period in 2021. Focusing on Suzano sales volumes. The Q2 performance was 9% higher than the same period of last year, and as seen in the graphic, a record volume for the second quarter. Domestic sales reached 68% of our total sales in the quarter, totaling 198,000 tons, also a 9% increase on a year-over-year basis. Inflation has continued to cause negative impact on paper costs during the…

Thanks, Fabio, and good morning, everyone. Let's move to Page 5 of our presentation so that we can address the results of our Pulp business unit for the second quarter of '22 marked by a record EBITDA for the second quarter. As you can note on the left graph, our sales performance was very strong, as mentioned by Walter, and totaled 2.7 million tons in the second quarter '22. Despite persisting logistic challenges not only affecting international shipping but also internal logistics in key regions and markets, our strong performance shows Suzano's ability to navigate in this adverse scenario, taking advantage of our differentiated supply chain setups, ensuring effective supply fulfillment to our customers. Since our inventories are still below optimum operational levels, we keep withdrawing from offering volumes to spot markets. The second quarter was marked by the continuity of the tightness of the supply and demand balance, mainly as a consequence of supply disruptions all over the world, such as new unplanned downtime events and the initial effects of the sanctions on Russian wood impacting European hardwood pulp production as well as the persisting logistics constraints, which consequently resulted in low hardwood pulp stocks. Pulp inventories throughout the chain are trending at low levels. And in our view, they are imminently concentrated on softwood pulp, which translates in a tighter availability scenario for hardwood grades. This scenario keeps placing challenges to paper and paperboard producers globally, our customers, as they are also running with low hardwood inventories while their production figures continued during the quarter quite strong and steady even with COVID-related lockdowns in China. The continued tightness of the S&D balance has led us to announce new rounds of price increases in all markets throughout the quarter, which were fully implemented with absolutely no concessions and with…

Thank you, Leo. Good morning, everyone. We are in the Slide #6. Cash costs, excluding downtime, in the second quarter stood at BRL 854 per ton, decreasing 2% in relation to the first quarter, performing as expected and shared with you on the last earnings call. The main positive highlight was the higher dilution of fixed costs backed by the production increase of mills under maintenance downtimes in the first quarter. The average FX appreciation in the period also contributed to the cash cost performance. Energy sales increased in the second quarter, linked to the higher operation rate of the industrial assets, including the full capacity reach of a turbo generator at Imperatriz mill. Looking now to the factors that pressure cash costs up. The wood cost increase was mostly related to the higher forest-to-mill distance in the quarter and the increase in the Brent price, which affects harvest and transportation operations. The input costs also took a toll due to higher chemical price, especially caustic soda and Brent price impact on energy consumption, mainly natural gas. It's worth mentioning that the commodity price pressure of BRL 44 per ton was partially mitigated by the higher operational performance. On the year-over-year comparison, the cash production cost ex downtime was 26% higher than the second quarter '21 due to the well-known and unforeseen inflationary pressure, mostly on commodities, meaning by relevance, Brent on industrial and forest operations and caustic soda. All the cost hit was particularly offset by the shorter average forest-to-mill distance and lower share of third-party wood in the period. The increase on fixed costs is explained by higher costs with labor and maintenance. Looking ahead to the second half of 2022, we still see cash cost production costs in pressure by exogenous factor of inflation, mostly on commodities, as described above, also related to some lagging effects on inventories turnover. In other words, it means that our performance going forward, considering information currently available on the macroeconomic scenario, would be hovering low single digit over on the first half of the average -- of the year average. Now I pass the floor to Marcelo Bacci to continue the presentation.

Thank you, Aires, and good morning, everyone. Moving to Slide 7. We show that we managed to keep our net debt at $10.5 million despite the significant CapEx, acquisitions, dividends and share buybacks that we had during the quarter. That's a result, of course, of our very strong cash generation. With that, our leverage came down to 2.3x, and our liquidity keeps very solid with $5.2 billion between cash and RCF. Our debt schedule continues to be very light in the next 3 years. And we have 7 years of average tenor and above 90% of our debt at fixed rates, which protects us from the rising global interest rates. Moving to Page 8. We see how much we have advanced in our FX protection strategy. The curve today is a lot steeper than last year, providing us with the hedging opportunities at very interesting levels. We now carry more than $4 billion of operational hedges with an average put of 5.53 and an average call of 6.55. In addition to that, we have a portfolio of Cerrado project hedges that is approaching at the end of the quarter $700 million with an average put at 5.98 and an average call at 7.43. This strategy has yielded for us a cash inflow of BRL 400 million during the second quarter since the FX was below 5 most of the time going quarter. Moving to Page 9. We are announcing a revised CapEx guidance to BRL 16.1 billion for 2022. That already incorporates the already announced Parkia and Caravelas acquisitions, which respond for most of the change. And there's more change in sustaining CapEx that will allow us to make some payments in advance to take advantage of our sizable cash position and to reduce financial cost. This is a lot…

[Operator Instructions] And our first question comes from Daniel Sasson from Itau BBA.

Congrats on the strong results. My first question is on pulp demand, mainly in Europe. Leo, you mentioned that the backlog for which you have visibility on is strong, which is great. But how concerned with potential paper capacity shutdowns in the regions are you given that we've read about some tissue producers having to shut down, maybe already being affected by rising energy costs in Europe, right? And that's the region where we've seen more resilient demand. So I'd like to know if you are concerned at all or if you see potentially pulp demand from that region looking or weakening ahead. And my second question, maybe on the same lines. I mean we've been talking to many investors who are more concerned with a synchronized global deceleration, right? The U.S. just reported negative GDP for the second quarter. Europe could suffer with rising energy prices. China is trying to beat a GDP growth target that is looking challenging -- more challenging by the day. Do you think that we could see a second half that is maybe slightly weaker than seasonality would suggest?

Daniel, this is Leo here. Thank you for your questions. Before obviously touching demand, let me tell you a little bit about how we were forecasting and planning our second semester of '22. Obviously, we always do that considering not only demand but also the supply side of the equation. Initially, during the first months of the year, while we were planning, supply was one of the key aspects that we were following and points of attention. But as of today, this is no longer a point of attention to us. I mean pulp supply, right? So what's the reason behind that? Because as these first months of the year have been going on, we have seen so many unprecedented, unexpected downtimes, which, as I mentioned in my speech, are adding almost already 2 million tons of losses during the year. That markets are tight. And when we add on top of that the effect of the hardwood restrictions to European pulp production, the delays in upcoming projects and also the continuing constraints in logistics, we see that supply should remain very tight for the upcoming months. And just on top of that, always when we have price differentials between softwood and hardwood, especially in a moment where our customers are very pressured with other inflationary points, they will tend to see how to even maximize more than historically the hardwood consumption. In this sense, as in this scenario has changed completely to us. And demand is now the greatest point to be watched, and its uncertainty in some regions and paper weights is the main variable that we are monitoring for the upcoming months, especially due to war-related energy restriction and events going on and discussions going on in Europe as well as an eventual and uncertain possible recession…

Our next question comes from Thiago Lofiego, Bradesco BBI.

So 2 questions here back to Leo. Leo, just continuing to look at downside risks here for pulp prices, which are definitely very close or at the highest level ever here. Just looking into the next 6 to 12 months, right? So the first question is you mentioned the 1.9 million tons of unplanned downtimes this year up until now, right? How much of that do you think will return in 2023 or in the next, let's say, 12 months? And then the second question is with China resuming paper and board exports, do you think this may be a risk to paper production in Europe and therefore a risk to pulp demand in Europe and then, of course, a risk to prices?

Thiago, thanks for your question. Coming to the issue related to downtime, it's very interesting to see that year-over-year, this number tends to be increasing, right? Historically, downtimes -- run time downtimes in the pulp sector added up to 700,000 tons annually. Then in 2021, they had reached peak at 2 million tons annually. And today, we already have close to that in 6, 7 months of the year. And it's very hard to say how much will come back to the market. What we're seeing is that as producers are getting bigger and bigger, any of these events has a much bigger impact in terms of market supply than there was when producers had a smaller production schedule. Coming to the question related to China resuming exports, indeed, they are, especially on print and writing papers and on ivory board. We have been tracking that, and they have gained more exports volume month by month. But due to the still very high container rates and logistic rates, we see that most of this volume is being allocated and concentrated in other markets in Asia or in Southeastern Asian markets. And we still see very little effect of that on European markets, North American markets or even South American markets.

That's clear now. And if I may, you also mentioned about low inventories across the board, right? Is there -- we often hear about floating inventories because of the logistics situation. There's a lot of inventories that are actually not visible. What can you tell us about the inventory situation from a broader perspective when we think about pulp?

Yes. First of all, when we analyze inventories in the hands of producers or at ports, we come up to numbers which are trending at low levels or even in some markets like Europe at below historic levels as well. So very tight. And when we look forward to our customer bases or to the paper producers' point of view, stocks are also go in the hands of paper and board producers. We recognize that part of a global stock should be on the waters due to the longer lead times to markets that we have not only from South America to markets but globally. But this is very hard to forecast. And any eventual effect of that coming into markets in our view is very limited because we don't expect, first of all, that logistics will be solved or improve significantly in the next months or quarters. Second, once it starts to be resolved, it's not going to be resolved at once and to all markets at the same time. So we're going to have a cadence of how these products will eventually come to market. But again, we don't see any of that coming back to markets on the short term as our view and logistics is still of a very tight situation for upcoming months.

You have a number for that floating inventory or maybe a range?

We don't. We forecast -- consultancy companies are forecasting anywhere from 700,000 to 1.5 million tons, but it's very hard to account for.

Our next question comes from Leonardo Correa, Banco BTG Pactual.

Yes. My first question, bringing Bacci in the discussion. Bacci, on the buyback, right, I think -- I mean, clearly, it's small, right? I think everyone agrees with that on a comparison to some other companies in the market. But when it was announced in May, there were pretty much 0 expectations on that announcement. Now there are also -- I didn't see people also expecting that this would be so quickly renewed, right? A second buyback being announced given the pace of repurchase has been accelerated, right? So my question is, can we think of this buyback more as an indefinite program just given the undervaluation of the share price? And can we see this potentially be removed over the medium term? Or are you viewing this more as a tactical move, super short-term move? So I just wanted to understand your logic and how the company is viewing this buyback, if it's more tactical or if it's more of a longer-term issue for the company. And my second question, moving into one of the critical points, I mean, running away from this market discussion for a second. The cash cost levels over the past quarters for Suzano and for the industry had been a key source of concern, right? My impression is that this has been one of the main sources of pushback and concern and negative revision to earnings, right, the cost inflation, which has been impacting everyone. Last quarter, you guys clearly spoke out to the market saying that we reached -- I mean, we could see cash cost levels peaking and stabilizing. I think there were many doubts at the time because commodity prices are so volatile, right? I mean looking ahead, we're already seeing a pretty severe correction in several commodities, right, even oil prices, which you mentioned during the introduction, have corrected a bit, but some other commodities correcting even further, right? So thinking of your pulp cash cost over the second semester, how can we view the path? I mean is there a clear path towards declines, which are more aggressive than just the stability? Or you think this high level will be maintained? Those are the questions.

Leo, this is Marcelo speaking. On the buybacks, we executed around 75% of the first program so far, according to published data. And we decided that it would be important to increase the size of the problem because we believe this is one of the most accretive and among the best returns that we can have in terms of capital allocation. As you know, we have been generating a lot more cash than we had planned and that we have this continuous challenge of where to allocate the capital. And we believe that the share buyback have very high returns according to our view of the market and the fundamentals that we see on the pulp market, as I said, when presenting the last slide of the presentation. So it is a strategic move, and it is also a technical move given the short-term availability of cash that we have now.

Leo, this is Aires speaking. As I mentioned, considering the information which are available on the macroeconomic scenario, especially related to forecast of Brent and caustic soda and international market associated with our strategy at -- as part to preparing our wood supply parts in Mato Grosso do Sul that could make us increase our third-party wood in the coming quarters, we see that it will be very challenging to have a significant reduction in the cash cost. But when you see our structure cash cost to coming years, we consider a significant reduction in the forest-to-mill distance in the wood. And we have a perspective of reductions in the Brent and the caustic soda that could bring us a significant reduction in the coming years. But considering the second part of the year, it will be challenging, but we are confident that we will keep the same level of cash cost.

Okay. So just to see if I understood the answer correct, you're saying that pulp cash costs will probably stabilize at these levels over the second semester given that you're going to acquire more third-party wood over the upcoming months, right? But your structural --

Okay. This part of the world, we can consider maybe a lower single-digit increase in the average of second half.

Just making a summary on that, this is Walter talking, is that on the long term, we are seeing lower structural cash cost due to the activities of retrofitting that we are doing with the improvement on the wood supply. But on the short term, it's depending on what would be the commodity prices and the Brent and chemicals. And in addition to that, we are seeing some lagging effect on our costs since we have been increasing commodity on the last quarter. That is depending what would be the potential implication of the recession on these commodities on the short term.

Okay. That's clear. So you're basically saying that there could be minor inflation in the second semester between, let's say, 2% and 5% quarter-over-quarter?

[indiscernible]

Our next question comes from Carlos de Alba, Morgan Stanley.

Just to make sure, coming back to Leo's question, so what you are saying is that you expect lower single increase in cost in the second half of the year on average versus the second quarter? And just to clarify this, please, I think, for the benefit of everyone in the audience.

Over the average of the first half.

Understood. Okay. Great. And then just 2 questions. On selling expenses, we saw an increase. Obviously, the supply constraints continue, and I think that is pressuring your expenses. Can you comment as to how do you see the outlook for the remainder of the year in terms of selling expenses? And then on prices, a couple of questions. One is spread prices in China, softwood versus hardwood, have now come down -- sorry, yes, in China has come down quite significantly from the recent peak that we have seen, still a little bit above the average for the last 10 years but coming down. And in Europe, the current spread is now below the average of the 10 -- the last 10 years. So do you think that, that move of that high spread that had benefited the consumption of hardwood is now done given where we stand in terms of the spread and the relatively higher cost of softwood versus hardwood and/or eucalyptus? And then on prices. Sorry, my ignorance, but maybe could you help us -- could you help us identify a period in time where hardwood or eucalyptus pulp prices because of the exposure to tissue didn't come down when we saw a global recession or a strong meaningful deceleration in global prices -- sorry, in global GDP?

Carlos, this is Carlos Anibal. The higher selling prices can basically be explained by a higher bunker due to high oil prices. Just to remind you, we have long-term contracts for our rate bulk shipments, and according those contracts, the bunker will impact the freight rates. We have no exposure to the spot market. So basically again, all the variation can be explained by higher bunker.

Thank you, Carlos.

Carlos, this is Leo here. I'm going to answer your questions regarding the spread among fibers and also about why we are more -- why we believe we should be, again, more resilient in recessionary moment. First of all, we recognized in the market the greatest tightness in hardwood than in softwood, which, as a consequence, should mean that this gap between prices of fibers should or would reduce if this scenario persist. But in our view, due to all other cost pressures that customers are facing, our customers, our paper and board producers are facing globally today, not only related to pulp. Any positive gap still will favor hardwood or softwood hub substitution into hardwood. So we believe that, yes, it's coming down closer to historical levels, still a bit over historical levels, but any positive gap will favor fiber substitution in favor of hardwood pulp, obviously. What we can say regarding recession, obviously, we cannot relate to prices and how they will occur, but what we have monitored in past cycles like in '08, '09 is that tissue demand is much more resilient in that sense. There was a slight reduction to tissue demand during that year, which recovered quickly already on the next year. And the reduction on tissue demand was even only part of what was the global GDP reduction at the time. So the fact that hardwood is so dependent on tissue, we believe that, that makes all our models much more resilient in case of an eventual recessionary moment.

Our next question comes from Rafael Barcellos Santander.

My first question is related to the new tissue plant that you announced and which will be integrated to your operations in the state of Espirito Santo. So should we continue to expect the company to integrate its older mills or even switch them towards more niche products such as dissolving pulp? And of course, I mean, what are the main opportunities in terms of changes in your production footprint that you see going forward? And my second question is related to pulp affordability. I mean I'm sorry for going back to the pulp discussion again, but I would say that pulp affordability has been a key -- the main question mark is whether or not the current pulp price level can start to destroy demand. So could you please share your thoughts on this? Do you believe that pulp affordability could represent a real risk to prices in the short term?

Rafael, thank you very much for your question. This is Walter answering here. I'd like to answer to you that vertical integration is one of the pillars of our long-term strategy already announced to the market. It does not mean that we are going to do in every single plant, but meaning that we are reaching full capacity right now in the tissue business. We are considering to expand our tissue operations, and we have a very good possibility of monetizing our credits in the Espirito Santo state. At this point of time, the project is not already fully approved. We have some precedent conditions. One of them is the approval of the Board to that, but we are forecasting that we are going to proceed with this investment that will create value to our shareholders.

Rafael, this is Leo here on your questions related to pricing and eventually how that can affect demand. We see today that pulp is not the only issue in the agenda of paper producers when they're analyzing their cost structure. Actually, in several markets like Europe, for example, all energy-related materials or cost components are of the top priority in the agendas of the producers. We have been seeing that paper price increases are going on in several markets like North America and Europe. We saw new increases already being announced for the upcoming months with the objective to mitigate this effect from high cost, again, not only related to pulp, mostly related to energy. And in China, despite several news related to prices or margin of producers, our view is that their margins, especially the larger paper and board producers, are still at supportive levels because due to this lagging shipping lead times, they are still receiving lower-cost pulp. And price increases are indeed taking place in the market. I'm not sure if you're aware of that, but we follow that closely with our customers. Tissue prices in China have moved up 30% versus the lowest in September and even 20% over the prices in December. And printing and writing as well is moving up more than 16% over the lowest in September and 10% in December. Now relating that to an eventual demand destruction, it's very difficult to associate directly, especially, again, taking into consideration that big offtakers of hardwood pulp is tissue, which is less elastic in demand in terms of their price points to markets. Maybe that will affect a bit more printing and writing rates, but we believe that tissue grades, specialty papers and packaging rates are resilient in that sense, and we don't expect demand destruction to them in that sense as well.

Our next question comes from Caio Ribeiro, Bank of America.

So my first question is on in-transit pulp inventories. Some industry consultants, they estimate that there's around 1 million to 2 million tons of pulp inventory in transit to end markets, in which once logistics normalize, that's going to allow those inventories to reach ports and create this perception that supply has become more bountiful. So I'm just curious if you also see this as a downside risk for prices ahead. And then my second question is on forestry asset acquisitions given some of those latest transactions that you've announced with Parkia and Caravelas. Do you envision any additional transactions of this nature. And as you assess your forestry asset requirements for the Cerrado project, where are you right now? Those are my questions.

Caio, thank you for your question. This is Leo here. Again, assessing this issue related to stocks in transit, we recognize a lower -- sorry, a longer lead time to market. So we obviously expect that more focus in transit to markets. But we see that as a very small downside risk to our model, first, because if we analyze strictly the number of available breakbulk vessels globally, there is no additional increase to that. So the same vessels are on the system. And second, that even in an improvement of a logistic scenario, which, again, as I have stated, we do not see any -- or very little, not to say any, chance of improvements on the upcoming months, it's very hard to see that this additional bulk [ home ] vessels will come to markets and might influence the S&D scenario coming forward. Again, for this to happen, everything will have to come up at once and to all markets at the same time, which is very little probable. So we don't see that as the downside risk to be monitored.

Caio, this is Carlos. Thank you for your question. We have been studying, analyzing opportunities to expand or go expanding our land bases. And that is already included in the CapEx guidance that we just provided.

It's very important to mention that this opportunity on Parkia and Caravelas was to buy back something that belonged to the company in the past. At that time, for different reasons and for different strategic scenario, the company decided to sell the assets. But we have the opportunity now since we merged Fibria and Suzano at the same land banking that would be very important to us to buy back these areas. We are not seeing any major new buyback programs in the land banking, but we are foreseeing some opportunities already included on the CapEx of buying, again, expanding our land banking for the future.

Our next question comes from Marcio Farid, Goldman Sachs.

I guess my first question is to Marcelo Bacci. Bacci, when we look at the numbers in the second quarter, free cash flow after expansion, maintenance CapEx and other expenses plus buybacks was 0, right? So it sounds like -- or it looks like buyback was -- the excess cash was invested in the buybacks, right? Obviously, the company is in a very comfortable balance sheet position to navigate this higher CapEx cycle. So just trying to understand, should we consider that excess cash going forward? Obviously, third quarter is expected to be strong as well. Can we divert it into cash returns, buybacks and maybe dividends as well in the next couple of quarters? Is that the right way to look at it, Marcelo? And then my second question, maybe to Leo. Leo, I think we've discussed a lot about price realization in the past quarters, but I think investors are still asking us a lot about that. So I guess it's important to get more details from you. So how should we think about price realization versus benchmark going into the next quarters? Should we expect Suzano to get closer to the benchmark levels and especially to peers as well as second half approach and as we see price stabilizing as well, right? Because obviously, when prices are going up, the lag effect is more pronounced. So those are my questions.

Thank you for your questions. Marcelo speaking. Free cash flow was 0, not only because of the buybacks, but mainly because of the CapEx program. We had an acceleration of the Cerrado project, and we had the settlement of the Parkia transaction, which is BRL 1.7 billion. That was an extraordinary event on the CapEx side. And also, we had the dividend payment that impacted the cash flow in the period. Looking forward, I think most of the excess cash flow that we generate will be diverted into CapEx, as I said, BRL 9 billion of CapEx in the second half of the year and for the additional buyback program that we just announced. The dividends are to be discussed for 2023. But with the cash flow generation that is, at this point, unlock guarantees given the buyback -- the backlog that we have at very good prices, that will enable us to have very good results probably in the third quarter as well. We expect to generate a sizable amount of cash and to have these returns or this additional cash, both coming back as a cash return through the buyback program and with additional investments that we're making given the fact that we are in a growing market.

Marcio, this is Leo here. I'm going to talk about our price realization a bit, recovering what I have mentioned in my presentation and bringing some additional information as well. As I have mentioned in my presentation, our prices in the second quarter still do not reflect all our price increases during the quarter. The main reason, obviously, is the lagging of the invoicing of our order books. And before coming forward with that, it's important, again, to restate that we have announced price increases during the quarter, every month to all markets, and all of them were fully implemented with no concessions and with absolutely no reductions to our order intake level. Coming back to our price realization, this order intake has been recurrently very strong during all these past months for several months already, and the fact that we had lower production figures in the first quarter due to the concentration of our maintenance calendar -- planned maintenance calendar has generated backlogs, which we are now managing to better make them and the orders reach our customer base. That tied to logistics scenario. Challenging logistics scenario is placing obviously even more challenges on us as we are not being able to timely recover these deliveries, and we are running approximately 60 days late on invoicing to Asian customers. On top of that, which I had not mentioned in my speech, we have been advocating for several years, and we believe that reducing volatility in pulp pricing is positive in general to the sector. And in some of our contracts, we already have been incorporating different price mechanisms, which obviously then will impact our price realization in moments of price spikes like the ones that we're seeing now. Last but not least, when comparing to our peers, obviously, I cannot comment on their price strategy or in the regional mix or what they're doing, but we expect much higher price realization during the third quarter due to the fact that I have -- due to these facts that I have mentioned before.

Our next question comes from Jon Brandt with HSBC.

Marcelo, first, and sorry if this was already discussed. I joined a bit late. But I'm just curious about the BRL 2.6 billion tax benefit that was recorded this quarter. Is that exclusively or predominantly due to the exchange rate losses during the quarter? Or was there something else going on? Should we -- assuming no significant exchange rate losses going forward, how should we think about tax rates in future quarters? And then my second question, and maybe just kind of picking up, Leo, where you left off. We talked about the 13% volatility of pulp. But if I remember correctly, going back 8, 10 years ago, that was probably around 6% or 7%. So volatility, while still low compared to other commodities, has certainly increased versus where it's been historically. So I'm just wondering how you see that in the future given that Asia is growing market share in pulp and consuming more than other markets. And certainly, we've seen more volatility over the past 8 years than I can remember. And so I guess, one, if you could comment on that. And then two, if you could just comment a little bit about would you consider trying to lock in longer-term prices, maybe 12 to 18 months with certain customers that you have long-standing relationships with in order to reduce the volatility. If you could -- I know it's a sensitive topic, but if you could shed any light on that, that would be great.

Jon, this is Marcelo speaking. The BRL 2.6 billion is not exactly a tax benefit. It's a deferred tax asset, which is due to the time difference between the FX variation and the realization of the FX variation in transactions that are settled during the period. So it is a time difference that is recorded as a deferred tax asset.

Jon, this is Leo here. We recognize this increasing volatility in pulp, but we also see that going on in other commodities. And just in addition to what Bacci had said before, we see pulp, and we have noticed that in several other downturn cycles as well that pulp is more resilient. And in our view, a big part of that is due to the fact of its close relationship to downstream consumption and user demand as tissue and packaging rates are of huge relevance to pulp demand. When we look at the future market in China on the [indiscernible] and what's going on, we recognize there's a lot of volatility. And there's a lot of speculative action going on, a lot of -- most of the trade that's going on is not truly related to actors in the pulp and paper market. And again, that's a future trend. And absolutely today, if customers need pulp, they obviously cannot buy at those price levels. They will have to rely on resale prices, which are all trending much higher than what we see on [indiscernible]. And last but not least, also related to [indiscernible], which obviously is softwood pulp rather than hardwood pulp, we see that current prices or market prices as our customers have been reporting that are being announced by North American producers, European producers and also South American producers are not pegged to what we see on [indiscernible]. And the price difference exceeds $115 per ton compared to what we track daily on the [indiscernible] future markets as well. So we see that of small relevance to the day-to-day dynamics of the pulp markets in China and globally.

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

Thank you very much for joining us for the session. I would like to thank you as well, the 17,000 team members of the company and 20,000 indirect team members that is helping the company to be better every single day. We are very pleased with the results but very humbled that we continue to work to deliver shareholder and stakeholder value to everyone. Thank you very much, and have a good day.

This Suzano's conference call for the second quarter results is finished. Have a nice day.