Good Signs for Containerboard, Pulp and Kraft Paper Markets Remain Weak

Jan. 31, 2012 - A bit of optimism is forming for the containerboard market. After falling sharply over the last 4-5 months, it appears that offshore and export prices have reached a trough, say analysts at Deutsche Bank (DB).

"In the past week, several European containerboard producers have announced price hikes of EUR 70-100 per ton, effective Feb 1 thru early-March," said Mark Wilde, senior analyst at DB who covers the paper and forest products sector. "At the same time, domestic containerboard prices remain stable. January linerboard estimated prices were flat at $640/ton.

"We think those figures are misleading as most tonnage is moving in mid-$500ís," Wilde pointed out.

MARKET PULP

According to DB, softwood pulp markets remain weak, but hardwood appears to have bottomed. Hardwood inventories in December fell 8 days of supply to 33 days, largely driven by a big jump in shipments to China. Softwood inventories rose 1 day to 36 days of supply.

"January U.S. NBSK prices fell $20/mton to $870/mton. Spot prices are at $600-650/mton and remain well below list price levels. In the softwood grades, we think the risk is skewed to the downside," Wilde noted.

KRAFT PAPER

Kraft paper markets have weakened and prices are falling, DB said.

"January prices fell $20-30/ton in extensible and bag grades. With December prices falling about $30/ton month/month, producers appear to have given up the October price increase of $50-60/ton," Wilde said.

"In the natural multiwall grade, January estimated prices slipped $10/ton," he added.

SOURCE: Deutsche Bank (Mark Wilde)