FOEX: Paper packaging prices mixed in Europe; downside pressures on containerboard grades met with tightening of raw material availability, recovered paper sees upward pressure with reduced availability, demand pull from China, Korea, India
February 14, 2012
– Containerboard Europe – In the US, the end of the year was relatively positive as to the box shipments with only a very small 1.8% decline in shipments with one less working day. Inventories, however, continued to head higher and the combined increase of stocks in the supply chain in December was more than 5-fold compared to the normal seasonal change. In Europe, the market situation remains weak. Further downside pressures on the prices are counterbalanced by both the on-going restructuring and the tightening of the raw material availability which has sent the recovered paper prices back upwards and tightened the ratio between testliner/corrugated medium and OCC/mixed waste abnormally narrow. While prices of the virgin fibre grades still headed lower, the raw material cost increases led to price increase announcements of 40-60 euro in Continental Europe. Some of those price hike efforts were also visible on our benchmarks. Last week, the currency movements put a downward pressure on our packaging benchmarks. Euro strengthened by 0.2% against the USD and by about 0.3% against the weighted basket of the non-EMU currencies. Our virgin fibre packaging benchmarks continued to head south, whilst the recovered paper based grades headed north. The PIX Kraftliner index lost 41 cents, or 0.08%, and closed at 514.47 EUR/ton. The PIX White-top Kraftliner index retreated by precisely 1.00 euro, or by 0.13%, and closed at 761.26 EUR/ton. Our PIX Testliner 2 index moved back up by 4.31 euro, or by 1.05%, and settled at 414.35 EUR/ton. PIX Testliner 3 index value rose by 10.07 EUR, or by 2.63%, and landed at 392.90 EUR/ton. Our PIX RB Fluting index headed higher by 13.30 euro, or by 3.57%, to 385.65 EUR/ton.
Recovered paper Europe – Recovered paper demand in China appears to continue healthy also after the Lunar New Year, as already anticipated earlier. The reduced availability of recovered paper in Europe, coupled with the demand pull from China, Korea, India and some other Asian countries means further upward pressure on recovered paper prices, again most clearly in the largest export grade, OCC. In some of the countries, OCC price went already above the ONP/OMG quotes. The PIX OCC 1.04 dd benchmark moved up by 10.01 euro, or by 8.70%, and closed at 125.08 EUR/ton. The price gaps to containerboard prices showed a blended behaviour. Against Testliner 2, the gap tightened by 5.70 euro to 289.27 EUR/ton. Against Testliner 3, the differential widened but merely by 6 cents to 267.82 EUR/ton. Against RB Fluting, the gap grew by 3.29 euro to 260.57 EUR/ton. Our PIX ONP/OMG 1.11 dd index headed higher by 1.42 euro, or by 1.14%, landing at 125.53 EUR/ton. As the PIX Newsprint benchmark came moderately lower, the differential to PIX ONP/OMG 1.11 narrowed by 2.45 euro to 388.07 EUR/ton.