Containerboard Industry Perspective
1st Quarter 2013
Containerboard price hike for Q2
By Jesse Marzouk
Only a few
months after
pushing
through a $50
per ton price
hike on containerboard,
producers
announced
another $50
per ton increase that is
slated to take effect in April.
The timing of the announcement took many market participants by surprise as the previous hike was only fully implemented in the fourth quarter of
2012. Analysts had expected a
price hike attempt in the second
half of 2013, but not in the first.
While the price hike will be met
with some resistance, especially
from independent box plants, at
this point it looks likely to be
implemented. Containerboard
mills and box plants continue to
operate with low levels of inventory, recycled fiber prices have moved up recently, and the
upcoming spring maintenance
season will keep mill operating
rates high. Furthermore, the
industry continues to benefit
from the consolidation that occurred over the last few years,
eliminating certain undisciplined
producers.
One of the reasons why
mills may have decided to announce a price hike now is the
upcoming capacity additions,
both greenfield and machine
conversions, that will take effect
as 2013 progresses. SP Fiber
Technologies continues its transition of some of its production
from newsprint to other grades,
including containerboard. Similarly, Atlantic Packaging’s conversion of a newsprint machine
to containerboard will likely occur in April. Lastly, a greenfield
site in New York state operated
by Norampac is expected to
start over the next few months.
These capacity additions will
add approximately 3% to North
American containerboard capacity. Current producers likely
want to implement a price hike
now before this extra capacity
fully hits the market.
Jesse Marzouk is a vice president and forestry products specialist. He has
appraised numerous U.S. and Canadian pulp, paper, and lumber-related companies
involved in manufacturing and distribution. Jesse received his MBA in finance from
Kellogg School of Management at Northwestern University, and has a degree in
finance and accounting from Indiana University.