October Containerboard and Box Data – A Bit Better

Nov. 18, 20911 - According to a report from Deutsche Bank (DB), October containerboard shipments were slightly better than expected and inventories decreased month/month.

"Exports were healthy, but growth has moderated," said Mark Wilde, a senior analyst at DB. "There is continued speculation about an early-2012 price hike. From our vantage point, meeting Santa Claus seems like a more likely event. Key near-term issues are lower export demand and prices, falling wastepaper costs and flattish domestic demand. DB is forecasting a $5 per ton quarter/quarter drop in containerboard prices in 4Q and a $40-45/ton year/year drop in FY12."

Box Shipments – A Litle Better
Both actual box shipments and average week increased 0.9% y/y. DBs estimated range was +1% to -2% y/y. "October numbers are consistent with trade commentary over the past few weeks," Wilde noted.

"Looking ahead, trade discussions about November have been more cautious, with contacts reporting slowing order patterns. We expect November andDecember to be a bit more challenging — a combination of seasonal slowing and macro softening. We expect overall demand to be down in the 0.5-1.5% range in the next 2 months."

Inventories Lower
DB said combined mill and box plant inventories fell 29K tons m/m to 2,230K tons in October — "at the low end of our forecasted decline of 25-70K tons," Wilde added. "Over the last 10 years, industry inventory levels typically declined 52K tons m/m in October, with standard deviation of 95K.

"Looking ahead, we note that [RockTenn] is planning to build about 115K tons of rollstock inventory over the next 3 months."

SOURCE: Deutsche Bank, Mark Wilde