FOEX: Containerboard prices in Europe move higher for recycled grades as announced price hike's implementation progresses but dip slightly for virgin-fiber grades; OCC prices gain on strength from Chinese demand but ONP/OMG prices still falling

Debra Garcia

HELSINKI , March 5, 2013 (press release) – Containerboard Europe – The improving economic growth in some of the emerging markets has helped the US exports of containerboards to a nice start for the year. Part of the high production volumes has, however, ended up building higher stocks. Price hikes of either 10% or 50 USD/ton have been announced by a number of producers, typically from April 1.

In Europe, earlier announced increases in RP-based grades have continued to go through, not fully, at least not yet, but with a reasonable success. As recovered paper prices have not moved much over the past few weeks, the operating margins of the packaging paper manufacturers have improved. Encouraged by the moves in the US and supported by the narrowed price differential between the virgin fibre and RP-based grades, now also the virgin fibre linerboard producers have announced price hikes, either from March or April, depending on the supplier and market. Market for both RP-based and virgin grades appears to have tightened through February and the lead times for getting extra tonnage had grown to 2-3 weeks.

Currency movements meant mixed pressures on our benchmarks this time as the Euro weakened by 1.4% against the USD but strengthened marginally, or by about 0.1%, against the weighted non-EMU currency basket. The price movements went again against the currency pressures, however. For virgin fibre based linerboards where Euro-weakening against the USD should help, the prices retreated again moderately. In RP-based grades where Euro-strengthening at least theoretically hurts, all benchmark prices moved up. Our PIX Kraftliner index headed further down by 58 cents, or by 0.10%, and closed at 580.12 EUR/ton. The PIX White-top Kraftliner index retreated by 33 cents, or by 0.04%, settling at 767.70 EUR/ton. Further success of the price increase efforts in the RP-based grades showed again in our recycled based benchmarks. In spite of the minor Euro-strengthening against the non-EMU basket, the benchmarks showed again clear gains. The PIX Testliner 2 index headed higher by 10.02 euro, or by 2.34%, to 438.78 EUR/ton; the PIX Testliner 3 moved up by 7.21 euro, or by 1.78%, to 412.52 EUR/ton and the PIX RB Fluting advanced by 6.62 euro, or by 1.69%, to 398.66 EUR/ton.

Recovered Paper Europe – In China, the purchasing activity appears lively after the Lunar New Year holiday returns and prices of recovered paper have moved up a few dollars/ton since mid-February. European exporters have suffered from the earlier weakness of the dollar and the prices in recent shipments to Asia have actually been down in Euro-terms. This is also reflected in the regional market, especially in ONP/OMG where the local demand pull is weak and the share of exports lower than in OCC. The recent re-strengthening of the dollar may reverse the competitiveness positions in export volumes somewhat, however. Compared with last week, our benchmarks moved to different directions.

The PIX OCC 1.04 dd index gained 27 cents, or 0.25%, and closed at 108.67 EUR/ton. With substantial price increases in RP-based linerboards, the margins to containerboards widened: to PIX Testliner 2 by 9.75 euro to 330.11 EUR/ton, to Testliner 3 by 6.94 euro to 303.85 EUR/ton and to RB Fluting by 6.35 euro to 289.99 EUR/ton.

For our old news and mags benchmark price, quotes were either unchanged or slightly down and, consequently, the PIX ONP/OMG 1.11 dd index value declined further, this time by 62 cents, i.e. by 0.50%, settling at 122.57 EUR/ton. The price gap to PIX Newsprint narrowed by 9 cents to 362.05 EUR/ton.

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