Containerboard Industry Perspective
4th Quarter 2012
Box price hike implemented
By Jesse Marzouk
In the
fourth quarter,
containerboard
manufacturers
worked
on fully implementing
the $50 per
ton price
hike on containerboard
that took effect in September.
This was the first national price
hike on both linerboard and
corrugated medium in more
than two years. Producers were
able to increase prices amid low
levels of inventories, high operating
rates, and industry consolidation
that removed undisciplined
producers.
Amid the recent price increase
on containerboard, box
manufacturers needed to increase
prices to maintain already
razor thin margins amid
excess supply and demand for
boxes that has remained flat. Although there was a significant
amount of uncertainty about an
8-10% box price increase, it has
gone through over the last several
months as integrated producers
(those that produce both
containerboard and boxes) put
their weight behind the increase.
Looking ahead to 2013,
containerboard producers will
look to maintain their prices
amid a slow environment for
box demand and companies
converting commercial printing
paper and newsprint to containerboard,
where profitability is much higher than in printing and
writing grades. Towards the
end of 2012, SP Fiber Technologies
continued its transition of
some of its production from
newsprint to other grades, including
containerboard. Similarly,
Atlantic Packaging in Canada
announced the conversion of a
newsprint machine to containerboard
for early 2013. How successful
these and other likely
future conversions go will largely
determine the price of containerboard
in the medium term.
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.