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Containerboard Producers Continue Push for Full Price Hike

Aug. 27, 2010 - Containerboard producers reportedly have realized $40/ton of the $60/ton price hike that was announced for early August. This follows hikes in January and April totaling $110/ton, said analysts at Deutsche Bank who cover the paper and forest sector.

According to senior analyst Mark Wilde at Deutsche Bank, the remaining $20 will remain “open” to September.

“Prospects for the balance of the hike are decent, but it will be a fight. The critical issue is the ability/determination of the large [integrated producers] to push downstream box increases.

“We expect a wave of box contracts to go “out to bid” as buyers test producer resolve,” Wilde predicted.

Wilde noted that July numbers suggest that box shipments took a small step backward and inventories rose by more than the typical seasonal amount.

Recycled Board

CRB (20-pt clay coated) producers implemented $20-30/ton (announced = $40/ton) price increase in August.

“The current price increase is driven by improved demand, strong order backlogs and higher operating rates,” Wilde said.

“This is the third price increase of the year after the $30/ton increase in January and $35/ton in April,” he added.

Wilde pointed out that at current levels, prices are up 15.6% from year-ago levels.

NOTES

RockTenn recently announced a $50/ton price increase on its Millenium CRB grade, effective Sept. 13. URB prices were flat at $610-640/ton in August after two rounds of price increases of $30/ton in February and $40/ton in April.

While supply demand dynamics support the current price increase, $60/ton decline in OCC prices from March 10 levels could make it difficult for producers to push through the remaining $10-20/ton increase rapidly.

SOURCE: Deutsche Bank




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