FOEX: Paper packaging prices up in Europe; containerboard price increases go through despite quietness of market, recovered paper grades see rise in inventories, relatively stable prices
May 2, 2012
Containerboard Europe – The US containerboard production numbers were good over the month of March with production up by 2.5% for total containerboard and with capacity utilization rate at nearly 96% (and corrugating medium at 99.5%), according to AF&PA. Part of this went to build up inventories at both production sites and at box plants. The box shipment data from FBA actually showed a decline of 4% for the month and a minor 0.5% gain for the first quarter. Box inventories moved down, as they typically do in March. Consolidation of the box industry has continued with e.g. IP closing box plants in the US and Norampac in Canada.
In Europe, the consolidation process also continues with the DS Smith’s purchase of SCA Packaging nearing completion, according to PPI Europe. Strike at SAICA’s packaging plants and some planned downtime in both containerboard mills and box plants helped to adjust the supply to the seasonally quieter than normal market conditions, driven by the economic woes of Europe. Despite the quietness of the market, the price increases announced earlier for April continued to go through also during the last week of the month. Recovered paper cost increases have more or less stalled which improves the containerboard producers’ margins.
Last week, the currency fluctuations had a mixed impact on our packaging benchmarks. Euro strengthened by 0.3% against the USD but weakened by about 0.2% against the weighted basket of the non-EMU currencies. All our packaging product benchmark prices moved higher, several of them only very moderately, however. The PIX Kraftliner index headed higher by 1.32 euro, or by 0.25%, and closed at 527.81 EUR/ton. The PIX White-top Kraftliner index value headed also higher, but by only 7 cents, or by 0.01%, and closed at 760.08 EUR/ton. Our PIX Testliner 2 index moved up by 2.14 euro, or by 0.47%, and settled at 454.44 EUR/ton. PIX Testliner 3 index value rose by 2.09 euro, or by 0.48%, and landed at 438.98 EUR/ton. Finally, our PIX RB Fluting index moved up by 1.40 euro, or by 0.33%, to 425.64 EUR/ton.
Recovered paper Europe – The risen freight rates and the difficulties of finding enough containers at the right places has hampered the export trade of recovered paper over the month of April. Those difficulties and the recently relatively weak production levels of brown packaging grades have led to a rise in RP inventories within Europe. Prices have been relatively stable over the past few weeks. The PIX OCC 1.04 dd benchmark headed higher by 18 cents, or by 0.12%, and closed at 148.50 EUR/ton. The OCC’s price gaps to containerboards all widened. Against Testliner 2, the gap increased by 1.96 euro to 305.94 EUR/ton. Against Testliner 3, the difference moved up by 1.91 euro to 290.48 EUR/ton. Against RB Fluting, the gap widened by 1.22 euro to 277.14 EUR/ton. Our PIX ONP/OMG 1.11 dd index continued to move up, however this time by just the most minimal one cent, or by 0.01%, and closed at 147.09 EUR/ton. The differential between newsprint and PIX ONP/OMG 1.11 widened by 4 cents to 360.22 EUR/ton.