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Numbers in U.S. Containerboard Sector Strengthened in May

June 16, 2010 - Market conditions for the U.S. containerboard sector in May continued to strengthen as domestic box shipments improved for the fourth straight month, inventories continued to drop, and operating rates remained high, according to analysts at Deutsche Bank (DB) covering the paper and forest sector.

DB noted that the April $60 per ton containerboard price hike was implemented and one producer (Longview Fibre Paper and Packaging) has just introduced an additional $60/ton price hike for July 1st.

Industry margins are poised to expand nicely in the second half of this year, DB added.

Shipments - Continued Recovery
DB said May containerboard and box numbers show continued cyclical recovery. Box shipment volumes rose 5.3% y/y (same number of shipping days). May figures compare to “blended” (actual and average week numbers) comps of +4.8% in April, +2.1% in March, +6.0% in February, and -1.6% in January.

Box volumes are reflecting the gains seen in other macro indicators like the ISM index, DB noted.

Inventories - Even Leaner
Total containerboard inventories fell 6.5% month/month in May, DB said. Combined mill and box plant inventories fell 134.2K tons m/m.

Looking over the last 10 years, inventories typically fall by an average of 53.7K tons m/m in May. At 1.93 million tons, industry inventories (box plants + mills) are at 30-year lows, DB added.

SOURCE: Deutsche Bank




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