Containerboard Industry Perspective
2nd Quarter 2012
Price hike in Q3?
By Jesse Marzouk
After experiencing flat
prices for most
grades of paperboard and
containerboard over the
last year, prices are now on
the move.
Prices for 20-pt. clay-coated
paperboard
declined from
$920 to $900 per ton in June
2012. Prices declined amid
weak demand and dropping
recycled fiber prices; however,
prices for corrugated medium
on the west coast rose from
$630 to $645 per ton, with anticipation of another $15 price hike
over the next few months.
Looking toward the third
quarter, the big question revolves around whether the $50-per-ton containerboard (both
linerboard and medium) price
hike announced by producers for August 2012 shipments will
be successful. While inventory
levels of containerboard are
relatively low at 3.7 weeks of
supply in June 2012, and the
industry has become more consolidated with International Paper’s purchase of Temple Inland, the following factors will
make implementation of any
price hike difficult.
- Year-over-year demand in
the U.S. for boxes, which
are made from containerboard, have been flat.
- Demand for containerboard
in emerging markets in
Asia and South America
has been weaker than otherwise anticipated.
- The strength of the U.S.
dollar has dampened export demand for containerboard abroad.
- Declining recycled fiber
prices have been a huge
benefit to producers, reducing the need to for producers to raise prices on recycled containerboard.
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.