Containerboard: Will Pricing Hold in 2nd Half?
July 17, 2009 - While most sectors of the paper industry have felt the sting of the tough economy, containerboard producers have weathered the recession in remarkable fashion, says Mark Wilde, senior analyst at Deutsche Bank.
But, they've got a ways to go.
After polling a variety of trade contacts, Wilde feels prices will remain stable through July because there has been no evidence of recent erosion in domestic spot market prices (June prices: corrugating medium $510/ton, linerboard $540).
But, he's not convinced prices have bottomed for the cycle. “We're even less swayed by arguments about a prospective pricing initiative this autumn,” Wilde notes.
“In our survey, most boxmakers and containerboard brokers point to continued sluggish volumes over the past 3-4 weeks. In our view, an autumn price hike in the wake of weak demand and low input costs is hard to reconcile,” Wilde said.
“Moreover, we won't be shocked by modest price ($20-40/ton) erosion over the next 6-8 months,” he added.
Wilde believes the first realistic shot at a price increase is most likely February/March of 2010.
SOURCE: Deutsche Bank Analysts