FOEX: Paper packaging prices in Europe down; weak containerboard demand in western half magnifies over-capacity while eastern Europe sees upward trending demand
December 13, 2011
Containerboard Europe – In the US, preliminary November data is not yet available. In October, the corrugated box inventories declined less than the seasonal norm but the box shipments were slightly (by 0.9%) higher than in October 2010. Capacity utilization rate weakened but was still at respectable 95%. Prices of containerboard have remained stable. In Europe, the weakness of the demand has worsened the over-capacity situation in containerboards in the western half. Saica’s new large machine, starting up in the UK in January will increase the over-capacity. Order books of the box plants have come slightly down, as have the prices. In Eastern Europe, however, overall demand trend remains upwards, even if it is weaker in 2011 than in 2010. Exports from Western Europe eastwards are likely to grow in 2012. The currency movements reduced this time the downside pressures on our packaging indices. Euro weakened by 0.9% against the USD and by about 0.8% against the weighted basket of the non-EMU currencies. In spite of the help from the exchange rate front, all our packaging benchmarks continued to head further down. The PIX Kraftliner index retreated by 5.04 euro, or by 0.92%, to 542.52 EUR/ton. The PIX White-top Kraftliner index fell by 1.26 euro, or by 0.16%, and closed at 778.12 EUR/ton. Our PIX Testliner 2 index declined by 1.46 euro, or by 0.32%, settling at 452.02 EUR/ton. PIX Testliner 3 index fell more, i.e. by 3.11 euro, or by 0.73%, landing at 420.32 EUR/ton. Our PIX RB Fluting index declined by 4.92 euro, or by 1.19%, to 407.23 EUR/ton.
Recovered paper Europe – RP prices have been quite volatile – once again – in 2011, both in Europe as well as in the US. High and rising prices through the first half of the year were replaced by rapid declines during the 2nd half. Reduced demand in the regional markets and the weaker pull from China have left supply above demand, even if the recovery potential has also weakened. In early 2012, UK consumption will go up with the new machine, leaving less for exports. As possibilities of increasing collection in Europe will be limited in 2012, supply/demand situation in export markets could change at some point during the 1st half. Some sign of this could already be seen in December with stocks of OCC down and with demand and prices in China picking up, at least temporarily. In Europe, recovered paper prices have fallen more during the second half of the year than what they gained during the first. The PIX OCC 1.04 dd benchmark lost 3.40 euro, or 2.93%, and closed at 112.51 EUR/ton. The price gap movements between end product and raw material were mixed. Against Testliner 2, the gap widened by 1.94 euro to 339.51 EUR/ton and against Testliner 3 it grew by 29 cents to 307.81 EUR/ton. Against RB Fluting the gap declined by 1.52 euro to 294.72 EUR/ton. Our PIX ONP/OMG 1.11 dd index retreated by 1.58 euro, or by 1.14%, landing at 136.92 EUR/ton. As the PIX Newsprint benchmark inched up, the differential to PIX ONP/OMG 1.11 widened by 2.13 euro to 374.61 EUR/ton.