Containerboard and Market Pulp Pricing Under Pressure, Recycled Board Flat

Nov. 22, 2011 - According to analysts at Deutsche Bank (DB), November estimated containerboard prices were flat month/month at $635-645/ton. However, pressure on domestic prices is mounting.

"We’re forecasting a drop of $5/ton quarter/quarter in 4Q, and $40-45/ton year/year in 2012," said Mark Wilde, senior analyst at DB who covers the paper and forest products sector. "There are 3 key issues. (1) Export demand has weakened (especially in Southern Europe) and prices are down $20-50/ton, with sharper declines in some markets; (2) OCC (Old Corrugated Containers) has fallen sharply in the last one month (-$50/ton m/m); and (3) domestic demand is tepid and entering the seasonally slower winter months."

MARKET PULP

Pulp prices continue to weaken, DB said. U.S. NBSK estimated prices fell $30/metric ton to $920/mton in November. Real prices appear much lower.

"Reports suggest that NBSK pricing in China is in the $650-680/mton range," Wilde noted. "At these levels, we think marginal cost producers may be near 'cash-cost.'

"Hardwood is even uglier. November estimated list prices were down $40-50/mton month/month. Reports suggest that BEK spot prices are about $530-550/mton," he said.

RECYCLED BOARD

November CRB (Coated Recycled Board) estimated prices were flat at $910-930/ton, and a $40/ton September price hike attempt has failed, DB said.

URB (Uncoated Recycled Board) estimated prices were flat at $655-685/ton. "The market appears to be relatively balanced. However, with OCC and other wastepaper costs falling sharply and demand hitting the seasonally slower winter months, prices could come under some pressure in the coming months," Wilde concluded.

SOURCE: Deutsche Bank, Mark Wilde