U.S. Linerboard Volumes Easing
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November U.S. containerboard and box volumes showed signs of easing, reports Mark Wilde, senior analyst with Deutsche Bank. Shipments were up 4.6% on an "actual" basis, but were flat on an average week basis. Inventories were +1.7% m/m, but remain at low levels. Domestic linerboard prices were flat at $640. With a slowing demand trajectory, and seasonally weaker shipments, the current focus for box producers should be defense as they attempt to maintain existing price levels.
The increase in actual containerboard and box shipments was mostly due to +1 shipping day this year compared with November 2009. "On an average week basis, this is the weakest comp we've seen since January 2010. On a ‘blended' average of 2.8% (mix of actual and average week), the result compares to an YTD volume gain of 3.2%. Looking ahead, we think December is likely to show further deceleration in the numbers," Wilde explained. Combined mill and box plant inventories increased 38,000 tons m/m to 2.274 million tons.
"Looking over the past 10 years, there is no clear directional trend in inventory shifts from October to November. On average, inventories have risen 5,000 tons m/m in November, with a standard deviation of 49,000. Inventories have now increased 342,000 since May trough levels. Normally, this would be a highly disturbing trend, but even after this rapid increase, inventories remain lean by historical standards," Wilde said.
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