In regard to U.S. containerboard, Wilde notes that "it is becoming quite clear that producers can't rely on exports to absorb increased U.S. output. Lower prices in many export markets suggest a combination of too much incremental supply/too little demand. The upshot? We think market downtime will be required in December and January to keep inventories lean and markets balanced. We believe some major producers are already throttling back production to avoid inventory building."
Wilde adds that on the cost side, domestic OCC (December = $166/ton) rose for the fifth consecutive month, up $43/ton since July. In the near-term, this is apt to squeeze margins for recycled mills and could create some cost-push pressure on prices. Specialty Paper Mills started a 72,000 tpy recycled medium machine in Santa Fe Springs, Calif., he reports.
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