N.A. Containerboard Pricing Shifts to "Defense Focus"
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The near-term focus in containerboard has "shifted to defense" as the North American industry tries to maintain prices flat through a seasonally weak period, according to Mark Wilde, senior analyst with Deutsche Bank. Domestic box shipments showed surprising strength in September, +4.6% year-over-year. "While inventories rose for the fourth straight month, levels remain relatively low and we were encouraged by the strong shipment figures. Exports appear to be providing an offset to some of the easing in domestic demand. A weaker U.S. dollar could make exports attractive for domestic producers and act as an outlet for excess production," Wilde says.
On the pricing side, a Deutsche Bank survey of several brokers and independent converters last week found little evidence of discounting on containerboard. On the cost side, domestic OCC rose for the third month in a row, up $12/ton to $147/ton in October "and we have heard reports of OCC as high as $175 - $180 in some markets," Wilde adds.
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