FOEX: Paper packaging prices in Europe down except white-top kraftliner, recovered paper grades continue downward trend with weak demand
December 20, 2011
– Containerboard Europe – In the US, November box shipments were released by the Fibre Box Association showing a 1% increase over November 2010. Inventories moved up more than the seasonal average, however. Containerboard shipments were up slightly more than the box shipments, or by 1.6%, and the operating rate remained high at 96.5%. Exports have done well over the year but are likely to face difficulties now with the USD strengthening and with prices in the key export markets heading lower. In Europe the first 10 months’ production was in case making materials down by 1.2% but also in these grades the latest months have been below the annual average. Order books have been thinning. Over-capacity in linerboards persists. The currency movements reduced again the downside pressures on our packaging indices. Euro weakened by 2.4% against the USD and by about 0.9% against the weighted basket of the non-EMU currencies. In spite of the help from the exchange rate movements, most of our packaging benchmarks continued to trend further down. The PIX Kraftliner index retreated by 3.13 euro, or by 0.58%, to 539.39 EUR/ton. The PIX White-top Kraftliner index moved back up by 48 cents, or by 0.06%, and closed at 778.60 EUR/ton. Our PIX Testliner 2 index declined by 5.00 euro, or by 1.11%, settling at 447.02 EUR/ton. PIX Testliner 3 index fell even more, i.e. by 9.47 euro, or by 2.25%, landing at 410.85 EUR/ton. Our PIX RB Fluting index declined by 8.68 euro, or by 2.13%, to 398.55 EUR/ton.
Recovered paper Europe – With downtime taken at paper and board mills, demand for recovered paper has been weak. Low paper consumption means, however, also reduced recovery potential. Inventories of RP at the collectors and paper mills are low. Somewhat livelier demand in China in December compensates the weakness reported from the European market. While some price increases have been reported from the Chinese market, the European regional prices continued to trend down. The PIX OCC 1.04 dd benchmark lost 2.41 euro, or 2.14%, and closed at 110.10 EUR/ton. As the liner and fluting prices fell more, the price gaps narrowed. Against Testliner 2, the gap was reduced by 2.59 euro to 336.92 EUR/ton and against Testliner 3 the differential narrowed by 7.06 Euro to 300.75 EUR/ton. Against RB Fluting, the gap tightened by 6.27 euro to 288.45 EUR/ton. Our PIX ONP/OMG 1.11 dd index retreated by 5.91 euro, or by 4.32%, landing at 131.01 EUR/ton. As the PIX Newsprint benchmark inched up, the differential to PIX ONP/OMG 1.11 widened by 6.72 euro to 381.33 EUR/ton.