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Travels with Larry Archive

U.S. Containerboard Slowing

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November box figures suggest that the containerboard demand trajectory is slowing, Wilde continues. On a blended basis (mix of actual and average week), shipments were +2.8% y/y against a YTD increase of 3.2% y/y. Inventories are creeping upward (+342,000 tons since May) and export prices are falling. "All of this suggests to us that producers must take more downtime in January. We note there are reports of major producers throttling back production to avoid inventory building, but public commentary has been nonexistent (we think this is to avoid anti-trust concerns)," Wilde says.

On the cost side, he adds, domestic OCC prices continue to rise, up $43/ton since July. In the near-term, this is apt to squeeze Q4 and Q1 margins for recycled mills and could create some cost-push pressure on prices. In the trade papers, December domestic price quotes were flat, "consistent with what we're noting in the market." However, export prices are easing. The biggest drops have occurred in marginal markets like the Middle East—off at least $100/ton. Latin American prices are easing as well, Wilde reports.

 

Xerium Technologies, Inc.