MethodologyContact usSupportLogin
Prices in the Gulf Cooperation Council (GCC) region for recycled fiber-based containerboard (RCCM) were largely up in April due to rising costs caused by the disruptions in the Middle East. Fastmarkets’ PIX indices, which cover locally produced brown testliner and fluting, showed increases on Tuesday May 5.
Fastmarkets calculated its monthly PIX Testliner GCC index at $494.23 per tonne on May 5, up by $11.79 per tonne (2.44%) from $482.44 per tonne on April 7. Fastmarkets calculated its PIX Fluting GCC index at $469.67 per tonne on May 5, up by $12.34 per tonne (2.70%) from $457.33 per tonne on April 7.
Containerboard demand in April was mixed, with demand described as good in some markets while declining in others, depending largely on geographical exposure to Middle East shipping routes, as the ongoing conflict disrupted trade flows via the Strait of Hormuz. The partial closure of the strait since late February has disrupted import and export by sea to the ports in the Persian Gulf.
Consequently, in Saudi Arabia — with its access to the Red Sea — market participants reported seeing largely increased demand. Sources said that the containerboard industry is preparing for the Hajj-pilgrimage, estimated to begin in late May, and the rising temperatures have also had an upward impact on demand.
“[Demand] is certainly better than last month and also, if I compare the same month to last year, it is again better,” a Saudi Arabia-based corrugator reported to Fastmarkets. “Normally one month before [the pilgrimage], the companies are building up their stocks for the Hajj season.”
Moreover, the corrugator said that smaller corrugators are facing paper shortages and may lack the financial backing to pay war‑related shipping surcharges upfront, resulting in business shifting toward larger participants and boosting demand for the corrugator’s company.
Additionally, there were more business days in April compared with March, when offices were largely closed for around one week during the Eid holidays.
Market sources said containerboard demand in the United Arab Emirates (UAE) fell in April, as export disruptions reduced demand from corrugators’ end‑use customers. These customers usually export a large share of their products using corrugated packaging, but with exports curtailed, box orders have slowed, prompting corrugators to reduce containerboard purchasing.
According to UN Trade and Development (UNCTAD) statistics, exports account for just over half of the UAE’s total foreign trade, highlighting the economy’s heavy reliance on external markets. As the partial closure of the strait has disrupted exporting of goods outside the region, demand across all industries have dropped.
“Dubai is a big hub of free exports also, for things like perfumes, lubricants, etc.; so all those things are down, which is impacting all the businesses quite a lot,” a GCC-based market participant said.
Another source said it was different compared with what it was like during Covid, when “people rushed to buy goods from supermarkets, and corrugators got very busy and [RCCM] mills were at full capacity. “
In addition to seaborne trade partially halting, tourism has also reduced, further pushing consumption down in the UAE.
Star Paper Mill, a tissue producer in the UAE, started trial production of its new PM1 at its facility in Abu Dhabi on April 11, the company announced on social media. Its new RCCM paper machine has a capacity to produce 134,000 tonnes per year of testliner, fluting, kraft and bag papers.
Market participants in Saudi Arabia reported mostly stable recovered paper (RCP) prices during April. But one participant noted a reduction in their RCP prices, due to their inability to export.
In the UAE, market participants first observed reduced RCP prices at the beginning of April, but from mid-April, RCP prices have increased slightly, due to increased demand from Star Paper, since the company started collecting RCP for its trial production.
After Iran partially closed the Strait of Hormuz in late February, the US began a naval blockade on Iranian ports and Iran-linked shipping vessels from mid-April, according to media reports. The blockade involved interception or redirection of vessels traveling to or from Iran’s coast, with an aim to restrict Tehran’s ability to profit from oil exports, attempting to put pressure on the country.
Despite a temporary ceasefire announced on April 8 and since extended, it has not resulted in a restoration of commercial shipping conditions.
The partial closure of the Strait of Hormuz keeps creating major logistical challenges, like largely disabling the use of some major ports in the region and increasing costs throughout the supply chain. It continues to have a bigger impact on the UAE compared with Saudi Arabia.
Shipping lines continue to charge war surcharges in the range of $3,000-3,500 per 40-foot container as previously reported. Market participants no longer have any vessels stuck at sea, as the majority of them have been rerouted — mostly to Saudi Arabia’s ports on the Red Sea coast, especially to Jeddah Islamic Port — while some have already received their orders.
“Shipping lines are not dropping the war surcharges. I understand they made it part of the freight,” a UAE-based market participant noted.
Despite the war surcharges and higher fuel costs due to the disruptions, carriers are struggling to sustain rate increases amid weak demand. The Drewry World Container Index (WCI) has declined by roughly 4% to $2,216 per 40-foot container on April 30 from $2,309 per 40-foot container at its most recent peak on April 9.
Bigger ports in the Strait of Hormuz, like the Port of Jebel Ali in the UAE and King Abdulaziz Port, also known as Dammam Port, in Saudi Arabia, are technically operational, though avoided due to the partial strait closure. Instead, market participants reported shipping lines mostly rerouting the majority of their vessels destined for GCC countries to Jeddah Islamic Port in Saudi Arabia. There, the goods are cleared out and transported onward by road on trucks. Some have reported also using smaller ports in the UAE, like Khor Fakkan Port and the Port of Fujairah. Rerouting often further delays deliveries and increases logistical costs.
“The shipping companies are rerouting [my vessels] from Dammam to Jeddah, by shipping first to India and after that put it into another ship and ship it to Jeddah, which will take time,” a Saudi Arabian corrugator said. “[The shipping company] increased prices for shipping due to the change in the shipping line.”
Additionally, another Saudi Arabia-based corrugator reported that clearance agent fees doubled in April compared with March, as shipments were rerouted to alternative ports. The rerouting has increased demand for clearance agents responsible for clearing cargo from ports and handling the container release before transporting the goods to the factory. Consequently, the demand for trucks also continues to increase, according to contacts.
“There is too much pressure. All GCC-based countries are now using our Red Sea ports,” a Saudi Arabian source noted.
Since the US began enforcing a naval blockade of Iranian ports and Iranian-linked vessels, global oil prices have continued to rise, with Brent crude oil futures trades rising from a spot price of $107 per barrel on April 2 to around $109 per barrel at 1pm Central European time on Monday May 4.
Increasing global oil prices have not been translated into rising fuel prices in Saudi Arabia, but the prices for the production of plastic packaging materials have increased. Saudi Basic Industries Corporation (SABIC), which makes plastics and chemicals among other things, has announced a price increase of 45-60% for its plastic products, according to Saudi Arabia-based sources.
“Global oil increasing affects all our [petrochemical] products. Stretch film, shrink film and plastic strapping have increased by 45%, so my costs have increased,” a Saudi Arabia-based corrugator said.
The UAE announced on April 28 that it plans to quit its participation in OPEC and the wider OPEC+ framework to focus on “national interests,” effective May 1, according to media reports.
Abu Dhabi National Oil Company (ADNOC) has plans to increase its oil production capacity from 3 million barrels per day (bpd) to 5 million bpd by 2027. Since the UAE has grown its ability to produce more oil, it has demanded a larger quota than was assigned for it. Before the start of the war, the UAE’s production capacity had grown to 4.85 million bpd, but under its OPEC agreement, it is only allowed to produce 3.5 million bpd from January 2025 to December 2026, according to OPEC’s Annual Statistical Bulletin 2026.
Experts do not anticipate an immediate impact on the market, due to the partial closure of the Strait of Hormuz halting exports. If, however, the strait should open and seaborne traffic should return to pre-war levels, the UAE could potentially flood the market with its 1.35 million bpd of extra production, as the UAE currently represents around 11% of OPEC production volumes.
Contacts in the containerboard and corrugated board industry did not think that the impact of the conflict has been fully seen yet in their production, as they have their stocks to get them by. But the main challenge continues to be increasing costs across the whole GCC region, with prices fluctuating daily.
“We are paying a lot of unnecessary additional costs for raw materials, [sea] freights, gas and transportation,” a GCC-based producer said. “We are not even able to export [outside the GCC region], only by land to neighboring countries. Even if Jeddah [port] is open, it does not make sense for me to move cargo inland from here to Jeddah and from Jeddah to the rest of the world, and also pay abnormal shipping expenses. It makes me very uncompetitive.”
Looking ahead, GCC-based containerboard producers and corrugators are expecting demand to increase in May, due to the approaching seasonal upswing.
The implementation of price increases on the back of increased costs remains to be seen as both containerboard producers and corrugators have to first study the market situation and observe how the conflict evolves.
“The situation really is unclear, and the uncertainty is very high. Nobody knows what’s going to happen tomorrow,” a GCC-based producer noted. “No one has a clear forecast [of the situation].”
Want deeper insight into containerboard pricing, demand trends and supply risks across the GCC and beyond? Explore the latest market commentary and forward‑looking analysis from Fastmarkets to stay ahead of shifting market dynamics and inform your next commercial decision. Learn more.
Learn how to monitor packaging prices using cost and price indices and understand the underlying cost drivers, from material cost to labor, energy and more. Examples include cartonboard, liquid container and paper bag.