FOEX: Paper packaging prices in Europe down except recovered paper grades, as weaknesses in economic outlook hurt order books for linerboards; recovered paper sees rising export demand, sinking availability
February 7, 2012
– Containerboard Europe – In the US, box shipments were moderately positive in December with a small 1.8% decline in shipments and with one less working day, the average daily shipments were actually up. Linerboard production was up marginally, or by 0.6%, in December, but a fair amount of that went to fatten the inventories which were up considerably at the box plants and moved marginally higher also at the producing mills. In Europe, weaknesses in the economic outlook impact the order books for linerboards negatively. With higher shipments to the export markets and slower consumption volumes, the availability of raw materials has tightened and prices are moving back up. A small French testliner producer went bankrupt, citing lack of raw materials as the cause. Restructuring continues in the packaging sector as UPM has sold its sack- and kraft paper production to Billerud and SCA has sold their packaging business, except for two kraftliner mills in Sweden to DS Smith, subject to the approval by the competition authorities. Last week, the currency movements had a mixed and relatively small impact on the packaging benchmarks. Euro strengthened by 0.1% against the USD but weakened by about 0.5% against the weighted basket of the non-EMU currencies. All our packaging benchmarks continued to head south, even though the OCC prices moved up. The PIX Kraftliner index lost 3.03 euro, or 0.59%, and closed at 514.88 EUR/ton. The PIX White-top Kraftliner index retreated by 3.27 euro, or by 0.43%, and closed at 762.26 EUR/ton. Our PIX Testliner 2 index lost 5.00 euro, or 1.2%, and settled at 410.04 EUR/ton. PIX Testliner 3 index fell by 2.31 EUR, or by 0.6%, and landed at 382.83 EUR/ton. Our PIX RB Fluting index declined by 3.89 euro, or by 1.03%, to 372.35 EUR/ton.
Recovered paper Europe – Recovered paper demand in China and in some other export markets continued quite lively until the Lunar New Year. No major change is expected with the return after holidays. The increasing volumes for exports, the sinking availability of recovered paper in Europe and the rising export prices show increasingly also in the regional recovered paper prices, most clearly in the largest export grade, OCC. The PIX OCC 1.04 dd benchmark moved up by 3.05 euro, or by 2.72%, and closed at 115.07 EUR/ton. The price gaps to containerboard prices continued to narrow. Against Testliner 2, the gap tightened by 8.05 euro to 294.97 EUR/ton. 300 euro is widely considered as the “minimum gap”. Against Testliner 3, the differential narrowed by 5.36 EUR to 267.76 EUR/ton. Against RB Fluting, the gap shrank by 6.94 euro to 257.28 EUR/ton. Our PIX ONP/OMG 1.11 dd index decline ended and the benchmark recovered by 8 cents, or by 0.06%, landing at 124.11 EUR/ton. As the PIX Newsprint benchmark moved up more, the differential to PIX ONP/OMG 1.11 widened by 37 cents to 390.52 EUR/ton.