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Containerboard Market On Shakey Ground

Oct. 15, 2009 - Pricing for containerboard dipped in September and forecasters pulled back estimated prices by $10-20/ton (East Coast -$10, West Coast -$20), according to analysts at Deutsche Bank. .

The cuts reflect gradual price erosion since May – more than any sudden recent drop, noted Mark Wilde senior analyst at Deutsche Bank covering the Paper & Forest Products sector.

Wilde said prices continue to vary depending on the region, supplier, and the customer. 42-lb unbleached kraftliner (KLB) in the Central U.S. is in the $450-470/ton range, while Northeast, upper Midwest and California are in the $420-440/ton range and small recycled mills are in the $300/ton levels.

U.S. containerboard export prices are up $10-20/ton to $330-340/ton FAS levels, driven by up-tick in demand, Wilde said. Most European producers have increased unbleached KLB prices by EUR 60/ton and EUR 100/ton on recycled grades.

However, with no meaningful pick-up in domestic box demand and with the black liquor tax credits set to expire by year-end, more permanent capacity reduction appears likely, Wilde cautioned.

Wilde posed the question: "When will IP and Smurfit announce permanent capacity closures?" Analysts at Deutsche Bank speculate that IP may make a move before the end of October.

SOURCE: Deutsche Bank




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