UPDATE 2-Shares fall at Stora, UPM after headquarter cartel raids

(Adds context, Jeffries comment)

HELSINKI/BRUSSELS, Oct 12 (Reuters) - Shares in Europe’s largest pulp producers fell on Tuesday after European Union antitrust regulators conducted surprise inspections at forestry companies’ headquarters.

Finland’s Stora Enso, UPM told Reuters they were both visited by European Commission officials on Tuesday.

“We can confirm their visit to Helsinki,” Satu Harkonen, head of communications at Stora Enso, told Reuters but declined to comment further.

Metsa Board also said regulators were inspecting the headquarters of Metsa Fibre, which is 24.9% owned by Metsa Board.

Swedish SCA, Holmen and Billerud all said they had not been contacted by antitrust regulators.

Shares in Stora and UPM fell around 4% to 13.90 and 29.80 euros respectively in afternoon trade and Metsa Board shares were down 2.1% at 7.80 euros, while SCA was down 1.8% at 135.60 crowns.

The European Commission on Tuesday said it raided wood pulp makers in several EU countries on concerns that they may be taking part in a cartel.

The EU competition enforcer did not name the companies, which can be fined up to 10% of their global turnover if found guilty of breaching EU rules. Nor did it give a deadline for the investigation.

“Pulp is a global commodity, so proving antitrust issues will be challenging,” Jeffries said in a note, but added a drop as big as 10% in earnings before interest, taxes, depreciation and amortization could be expected.

Pulp demand has increased sharply in the past 18 months as the COVID-19 pandemic boosted demand for tissue and cardboard, which accelerated forestry firms’ shift from paper to pulp as their core business.

Pulp is used to make tissue, writing paper and paperboard among other paper products. (Reporting by Foo Yun Chee in Brussels, Essi Lehto in Helsinki and Simon Johnson in Stockholm; Editing by David Goodman and Alex Richardson)