FOEX: Paper packaging prices in Europe down; containerboard demand down, recovered paper feels effects of export price drop

Kendall Sinclair

HELSINKI , September 27, 2011 (press release) – Containerboard Europe – In North America, both containerboard and boxboard markets enjoyed high operating rates in August, even if the total volumes shipped were flat or slightly down. The outlook for Q4 is less bright with the weakening of the global economic growth expected to impact also the volumes in world trade and, with it, reduce the growth rates in packaging products. In Europe, the exports outside the region are clearly down from the pace seen over the first 3-4 months of the year. This is beginning to show in the demand for packaging products. High food prices and weak household income development has started to reduce the regional demand growth for food and beverage based packaging, brown and white. The month of August appears to have been relatively better than June-July, however. With RP-prices on the way downwards, the declines seen were bigger in testliners and in RP-based fluting than in the virgin fibre based grades. The currency development had a mixed impact on the benchmark prices. The Euro weakened by 2.4% against the USD but strengthened by about 0.5% against the weighted basket of the non-EMU currencies. All our benchmark prices in packaging grades headed down. Our PIX Kraftliner index fell by 2.61 euro, or by 0.46%, and closed at 568.17 EUR/ton. The PIX White-top Kraftliner index value retreated by 94 cents, or by 0.12%, and settled at 785.63 EUR/ton. Our PIX Testliner 2 index value headed south by 8.02 euro, or by 1.6%, and closed at 493.09 EUR/ton. PIX Testliner 3 index moved down by 7.13 euro, or by 1.5%, and closed at 465.60 EUR/ton. Finally, the PIX RB Fluting index value fell by 5.77 euro, or by 1.26%, to 451.17 EUR/ton.

Recovered paper Europe – The demand for recovered paper has been relatively good in China and prices of RP there have stabilized or even moved up a bit. The regional market in Europe still feels the impact of the earlier export price drop and also the weaknesses in the paper and board order book development in September. The prices of most recovered paper grades have continued to trend downwards but remain well above the long-term average and roughly 20 euro above the level in the beginning of the year. Data over last week’s RP business in Europe shows that our OCC 1.04 index lost 2.69 euro, or 1.8%, and settled at 146.50 EUR/ton. With a bigger value-wise drop in liner prices, the price differentials to containerboards narrowed: against Testliner 2 the gap shrank by 5.33 euro to 346.59 EUR/ton and against Testliner 3 the differential narrowed by 4.44 euro to 319.10 EUR/ton and against RB Fluting by 3.08 euro to 304.67 EUR/ton. Our PIX ONP/OMG 1.11 dd index lost 71 cents, or 0.4%, and closed at 170.42 EUR/ton. As the PIX Newsprint index rose marginally higher, the differential to PIX ONP/OMG 1.11 widened by 81 cents to 338.58 EUR/ton.

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