U.S. Containerboard Market to be "Tougher" in Second Half

Is the economy slowing? Mark Wilde, senior analyst with Deutsche Bank asks. The 6.9 pt. m/m drop in the ISM index was a huge warning shot for containerboard/box producers, he says. Meanwhile, competitive pricing and rising input costs suggest that the second half of this year will be tougher than expected. Transaction prices were reportedly flat at $635 - $645/ton in May. "However, we believe open market containerboard prices are sloppier. Box prices are down ˜$15 - $30/ton since the start of the year. RockTenn has announced closure of three Smurfit-Stone Container Corp. (SSCC) box plants (see news item below). The big issue, however, is mill capacity. Deutsche Bank expects RockTenn to eventually close two or three SSCC mills," Wilde notes