FOEX: Paper packaging prices in Europe down, containerboard prices affected as euro strengthens against the dollar, demand for recovered paper softens
December 18, 2012
– Containerboard Europe – Industry concentration continues with Dunapack having bought a Turkish corrugated board manufacturer. Looking at the markets, the balance in virgin kraftliner remains tighter than that in RP-based grades. US market is firm, export needs reduced and East Coast port strike, if it starts, would reduce those exports more. Maintenance/other repair downtime taken earlier this year, at least in Sweden and France, reduced the producer inventories. Consequently, supply/demand situation is quite good. Longer-term, the wide price gap to RP-based grades risks shifting demand between the grades, though. In testliners and RP-fluting, an over-supply situation persists and announced downtime at containerboard mills and box plants does not make the near-term future outlook any better. Prices of recovered paper based grades are under downward pressure. In virgin fibre liner, the minor index value declines seen, for instance this time, have typically been directly linked to the exchange rate variations. Currency movements meant downward pressures on the benchmark prices. The Euro strengthened last week by 1.4% against the USD and by about 0.7% against the weighted non-EMU currency basket. All our packaging indices headed south, even if only rather moderately. The PIX Kraftliner index inched lower by 15 cents, or by 0.03%, to 584.20 EUR/ton. The PIX White-top Kraftliner index lost 1.18 euro, or 0.15%, and settled at 777.85 EUR/ton. The price development of testliners and fluting was also negative, largely due to the exchange rate movements. The PIX Testliner 2 index moved lower by 9 cents, or by 0.02%, and closed at 426.48 EUR/ton. The PIX Testliner 3 index retreated by 1.26 euro, or by 0.31%, ending at 402.03 EUR/ton and the PIX RB Fluting index lost 91 cents, or 0.23%, and closed at 386.62 EUR/ton.
Recovered Paper Europe – After a spurt in RP-purchases by the Chinese buyers in late October through most of November, the export demand for recovered paper, especially OCC and mixed grades, has quieted down in December. Obviously, either the stocks in China had been re-built or high enough import quotas had been secured for 2013 with 2012 volumes, or a bit of both. Whatever the reasons, the demand for recovered paper in Europe has softened, both for exports and for regional causes. Extended holiday shutdowns and the general weakness of the European economy reduce the needs for OCC as well as for old news and mags. Prices in Asia have been sliding down since mid/late November and now both the US and European regional prices have followed that trend.
Our PIX OCC 1.04 dd index lost ground for a second week in a row. The retreat was 1.85 euro, or 1.66%, and the index value settled at 109.28 EUR/ton. The price gaps to the related packaging indices widened. The differential of PIX OCC 1.04 dd to PIX Testliner 2 increased by 1.76 euro to 317.20 EUR/ton, to Testliner 3 it widened by 59 cents to 292.75 EUR/ton and to RB Fluting the gap grew by 94 cents to 277.34 EUR/ton. Also our old news and mags benchmark slipped lower again. The PIX ONP/OMG 1.11 dd index retreated by 27 cents, or by 0.21%, closing at 128.29 EUR/ton. The price gap to the PIX Newsprint benchmark narrowed this time by 59 cents to 367.44 EUR/ton.