Containerboard Markets Snug

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All major North American producers have announced a third $60/ton price increase for containerboard, effective early August, Wide reports. Hikes in January and April added $110/ton to domestic list prices. While industry fundamentals are very favorable, macro indicators (soft employment, easing in ISM index, etc.) are suggesting that hike No. 3 will be tougher than expected, he adds. Industry fundamentals point to a snug market—continued recovery in box shipments (June +3.7% y/y), high operating rates (96.7%), and inventories still at 30-yr lows.

Permanent capacity reductions of ˜3 million tons since the fourth quarter of 2008 and spring maintenance downtime have further tightened the markets. Conditions are tight elsewhere. Smurfit Kappa and Mondi last week announced EUR 60/metric ton price increases on unbleached kraft linerboard in Europe, effective September 1. European producers have already boosted prices by EUR 150/ metric ton ($176/short ton) in 2010. Including the latest announcement, the European moves, at current exchange rate, would sum to $247/short ton— $77/ton above the North American proposals, Wilde points out.