Containerboard Strong in N.A. but Could Slow as Markets Soften

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All major North American containerboard producers announced a third $60/ton price increase, effective early this month, "and we expect their box hike to follow," Mark Wilde, senior analyst with Deutsche Bank, points out. Hikes in January and April added $110/ton to domestic list prices.

"While industry fundamentals are very favorable (June box shipments +3.7% y/y, high operating rate of 96.7%, and inventories still at 30-year lows), macro indicators (soft employment, easing in ISM index, etc.) suggest that hike No. 3 will be tougher than expected," Wilde says.

Permanent capacity reductions of ˜3 million tons since 4Q08 and spring maintenance downtime have tightened markets, Wilde adds, noting that conditions are also tight elsewhere. Smurfit Kappa & Mondi recently announced a EUR 60/metric ton price increase 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. Last week, Mexican producers announced a $40 - $50/ton containerboard price increase, effective August 1, Wilde reports.