Will Containerboard Price Hike Stick? OCC Pricing Remains Weak

Aug. 9, 2012 - Virtually all containerboard producers have announced a $50/ton price hike for early to mid-August and a concurrent box price increase, noted analysts at Deutsche Bank who cover the paper and forest products sector.

"News that AICC (Association of Independent Corrugated Converters) is opposing the price hike on the grounds of sluggish demand and lack of cost pressures (falling OCC) is probably less important than it appears. It doesn't reflect much of what we've heard in the market. DB remains constructive on the attempt. July estimated linerboard prices were flat at $635-645/ton," DB said in a statement.

Old Corrugated Containers (OCC) — Are we nearing a bottom?
"Trade reports suggest that domestic OCC is down about $20-30/ton month-month in August. In July, OCC dropped $4/ton to $117/ton," DB said.

"The biggest issue is weak demand in China and falling export prices. In the ST, falling OCC may aid margins. However, containerboard producers may find it more difficult to pass-thru announced price hikes if OCC continues to moderate," DB concluded

SOURCE: Deutsche Bank