Containerboard Pricing Flat in October, Recycled Boxboard Pushing Up

Nov. 10, 2010 - Containerboard list prices remained flat in October and the near-term focus has shifted to defense as the industry tries to maintain prices through a seasonally weak period, according to analysts at Deutsche Bank who cover the Paper & Forest Products sector.

Domestic box shipments showed surprising strength in September, +4.6% y/y. “Although inventories rose for the fourth straight month, levels remain relatively low and we were encouraged by the strong shipment figures,” Mark Wilde, Senior Analyst, pointed out.

“Export volumes appear to be offsetting some of the easing in domestic demand. One cautionary note: we talked with several brokers at last week's International Containerboard Conference and heard consistent reports of export pricing to the Middle East coming under severe pressure,” Wilde said. “Prices are reportedly down [about] $80-100/ton in recent weeks.

“On the cost side, domestic OCC continues to rise as the Official Board Market reported $10-35/ton hikes across most of the US,” he added.

Recycled Boxboard
In the recycled boxboard markets, things appear solid and producers have announced price increases on both grades.

Last week, Sonoco announced a $30/ton price increase on URB (uncoated recycled board), effective Nov 29. Since the beginning of the year, URB prices are up $95/ton. In October, URB prices rose $25/ton (announced = $35/ton) to $635-665/ton, +17.1% y/y, Deutsche Bank said.

In CRB (coated recycled board), Graphic Packaging is out with a $40/ton increase, effective Dec 1. As with URB, list prices for CRB are up $95/ton since the beginning of the year. In October, CRB list prices were flat at $845-865/ton, +12.9% y/y.

The price increase is driven by improved packaging demand, strong order backlogs and higher operating rates, the analysts added.

SOURCE: Deutsche Bank