FOEX: European OCC prices down despite increases in Asia, narrowing gap with prices for testliner, RB fluting, which fell in Europe as higher output led to surplus stocks; index for kraftliner up slightly, white-top linerboard dips

Debra Garcia

HELSINKI , January 22, 2013 (press release) – Containerboard Europe – The US containerboard mills continued to run at over 95% capacity utilization rates in December (linerboard at 93% and medium mills at 101%) and the production of containerboard was up by 2.3% against December 2011 and by 0.6% for the year as a whole. With continuing strong exports, supported by the re-weakening of the USD, with below-average inventories and with some producers behind in their shipments, the North American market situation is quite tight.

In Europe, the weak economic situation and poor short-term future outlook depress all paper industry, including packaging. The situation is, however, better than in graphic papers. November production was up as much as 5.5% against November 2011 and the cumulative number is also marginally positive at 0.4%. After reportedly fairly full production in December, too, inventories appear to be now on the high side. The small increases in OCC prices in Asia in January are beginning to show also in Europe. Cost may well be also one of the reasons for an announced substantial price hike in testliner/fluting by at least two producers from February 1. Currency movements meant again a strong pressure downwards. Euro strengthened last week by 0.4% against the USD and by about 1.6% against the weighted non-EMU currency basket. All our packaging indices but kraft linerboard headed south. The PIX Kraftliner index gained 4 cents, or 0.01%, and settled at 583.89 EUR/ton. The PIX White-top Kraftliner index headed down by 1.62 euro, or by 0.2%, to 774.68 EUR/ton. The PIX Testliner 2 index fell by 4.36 euro, or by 1.04%, and closed at 414.97 EUR/ton. The PIX Testliner 3 index retreated by as much as 7.05 euro, or by 1.8%, ending at 389.81 EUR/ton and the PIX RB Fluting index lost 4.41 euro, or 1.15%, and closed at 377.74 EUR/ton.

Recovered Paper Europe – With obvious links to improving economic activity in emerging economies in Asia, more purchasing activity and slightly higher prices have been reported in China and some other Asian markets after the quieter November-December period when prices fell. Growth in exports of goods from China was very substantial in December. In Europe, the increased containerboard production volumes in November (and December?) improved also the demand for recovered paper with less increase, at least momentarily, in RP supply. Thus any increase in external demand = exports, would tighten the balance.

In our recovered paper indices, changes were this time to different directions. Our PIX OCC 1.04 dd index moved back up by 52 cents, or 0.5%, and settled at 108.14 EUR/ton. The changes to the related packaging indices led to narrower margins. The differential of PIX OCC 1.04 dd to PIX Testliner 2 decreased by 4.88 euro to 306.83 EUR/ton, to Testliner 3 it narrowed by 7.57 euro to 281.67 EUR/ton and to RB Fluting the gap decreased by 4.93 euro to 269.60 EUR/ton.

Our old news and mags benchmark value headed further down. The PIX ONP/OMG 1.11 dd index retreated by 87 cents, or by 0.7%, and closed at 126.61 EUR/ton. The price gap to the PIX Newsprint benchmark narrowed by 1.44 euro to 365.16 EUR/ton.

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