May U.S. Box Shipments Continue Improving

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U.S. domestic box shipments improved for the fourth straight month, inventories continued to drop, and operating rates remained high, reports Mark Wilde, senior analyst with Deutsche Bank. The April $60/ton containerboard price hike was implemented and one producer (Longview Fiber) has just introduced an additional $60/ton price hike for July 1. Industry margins are poised to expand nicely in the second half of this year. The rising U.S. dollar and global economic uncertainty do represent risks, however, Wilde notes.

Box shipment volumes rose 5.3% y/y in May (same number of shipping days), Wilde continues. May figures compare with "blended" (actual and average week numbers) comps of +4.8% in April, +2.1% in March, +6.0% in February, and -1.6% in January.

Total containerboard inventories fell 6.5% m/m in May. Combined mill and box plant inventories fell 134,200 tons m/m. Looking over the past 10 years, inventories typically fall by an average of 53,700 tons m/m in May. At 1.93 million tons, industry inventories (box plants + mills) are at 30-year lows, Wilde points out.