FOEX: Paper packaging prices in Europe down except old newspapers/old magazines with weak supply and demand, negative impact of currency development; weakened OCC exports, prices in China
August 30, 2011
– Containerboard Europe – The slowing down of the economic growth means slower growth also in the packaging demand worldwide, including Europe, the US as well as China. There is still some growth momentum left, however, as seen, for instance by the US box shipments which were slightly up in July. With the slowness of the domestic growth, with inventories up and with the re-start of a large containerboard machine approaching, the supply and demand balance has not been strong enough, even with the 98% capacity utilization ratio registered in July, to support the price initiatives and the Q3 increase attempts have failed. In Europe, the seasonal lull in demand is counter-balanced by summer holiday stoppages, common especially in southern parts of Europe and thus both deliveries and production volumes have been thinner. The currency development had a negative impact on the benchmark prices, at least from the producers’ point-of-view. The Euro strengthened by 0.1% against the USD and by as much as 1.2% against the weighted basket of the non-EMU currencies. These changes, together with the weakening of the business environment had a further negative impact on the prices and all our benchmark prices in packaging grades headed moderately lower. Our PIX Kraftliner index fell by 44 cents, or by 0.1%, and closed at 577.39 EUR/ton. The PIX White-top Kraftliner index value lost 32 cents, or 0.04%, and settled at 784.29 EUR/ton. Our PIX Testliner 2 index value retreated by 2.47 euro, or by 0.5%, and closed at 504.43 EUR/ton. PIX Testliner 3 index came down by 2.72 euro, or by 0.56%, and closed at 481.40 EUR/ton. Finally, the PIX RB Fluting index value retreated by 1.40 euro, or by 0.3%, and settled at 471.15 EUR/ton.
Recovered paper Europe – The demand has been moving up and down in China. The latest news is that the slight weakening in the packaging demand has again reduced the recovered paper import pull and weakened prices in China and other Asia, at least for OCC, the key import grade. Over the year, exports from the western world are up, however. E.g. the US exports of OCC are up by more than 40% against 2010 volumes. European exports have not been equally strong. With the summer lull in the packaging industry, European demand and supply for recovered paper are both down and the balance remains fairly tight. Price movements have been small over the recent weeks. Our OCC 1.04 index lost 34 cents, or 0.22%, and settled at 152.01 EUR/ton. The price differentials to containerboards narrowed: against Testliner 2 the gap was reduced by 2.13 Euro to 352.42 EUR/ton; against Testliner 3 the differential shrank by 2.38 EUR to 329.39 EUR/ton and against RB Fluting by 1.06 euro to 319.14 EUR/ton. Our PIX ONP/OMG 1.11 dd index gained 4 cents, or 0.02%, and closed at 172.71 EUR/ton. As the PIX Newsprint index moved up slightly more, the differential to PIX ONP/OMG 1.11 widened by 10 cents to 332.44 EUR/ton.