U.S. Shipments of OCC to China Down Slightly in Since March

May 10, 2011 - U.S. export of OCC (Old Corrugated Containers) to China was down slightly in May and down about $10-15/ton in the last couple of months, said analysts from Deutsche Bank (DB)who cover the paper and forest products sector.

However, OCC could rise in the coming months, DB said in its weekly newsletter, Dr. Paper's Pulse on Pricing. Key drivers are lower OCC generation in April, a jump in linerboard exports from the U.S. (implying lower recycling), and several new machines starting-up in China in the coming months.

Domestic OCC in April was down $2/ton to $156/ton, DB added.

CONTAINERBOARD

According to DB, flooding on the lower Mississippi River may help to further tighten containerboard supplies. "International Paper is reportedly preparing to close its 1600 tons per day Vicksburg, Mississippi linerboard mill," said Mark Wilde, a senior analyst at DB. "Added to high maintenance downtime in 2Q and stronger box shipments, this could produce greater-than-expected drawdown in containerboard inventories, setting the stage for a 3Q price hike," he said.

Wilde noted that April containerboard prices were reported to be flat. "Sadly, figuring out what constitutes 'the price' has become difficult with publishers reporting 3 (or 4) different prices for one commodity," Wilde said.

"Reliable trade sources have been reporting increased discounting in the box market. Q1 earnings results seem to bear those reports out, suggesting that we ought to focus more on producers' bottom line rather than the trade papers," Wilde added.

Bleached Board

International Paper and RockTenn last week announced a $50/ton price increase on SBS coated paperboard, effective late-May/early-June. No other producer has yet announced a price hike. Demand is stable and order backlogs remain healthy, but not as strong as in 2010, DB said.

In April, SBS prices were flat at $1,130 - $1,180/ton, +8.5% y/y and +26-28% vs. April 2008.

SOURCE: Deutsche Bank