Containerboard prices rise in Mexico despite market negativity in June

Discover how Mexico's containerboard prices are defying market expectations and starting to rise, offering insights into the global packaging industry's dynamics. What could this mean for the industry?

Prices have started to move up in Mexico following a downturn period that started in mid-2022, several market participants in the country’s containerboard market confirmed to Fastmarkets.

Linerboard prices peaked at an average of 15,500 pesos ($790) per tonne in July 2022, reaching a bottom of 12,300 pesos in March 2024.

In this long period of price drops, sources repeatedly stated that inventories accumulated during the pandemic, while the economic environment not only in Mexico but also in the US market impacted demand.

Since the beginning of 2024, however, sources began to expect a more positive environment for packaging demand, while global containerboard prices started to improve, with US producers setting price hikes for its domestic and export markets.

Domestic prices took longer to react as the local peso currency remained depreciated against the dollar, making the market very attractive for imports, sources have reported.

But this trend reversed in June with the conclusion of presidential elections in the country and a strong devaluation of the peso, moving from 16.50 pesos per dollar on May 21 to 18.50 pesos per dollar on June 18.

Fastmarkets’ price survey detected an increase of 100 pesos per tonne, with expectations of higher increases to take place in July. Linerboard is now traded for 12,200-12,600 pesos per tonne, down by 6.8% year on year, while medium at 11,200-11,600 pesos per tonne, 8.8% lower than a year ago.

Imported US kraft linerboard stabilized in June at $630-650 per tonne, after moving up in April and is still 4.5% lower than a year ago.

In June, sources still had a mixed view on the recovery of the market, with some stating that prices had already started to move up, while others expected effective increases to be implemented in July.

“There is a combination of the inflationary costs accumulated in this period while the peso currency now allows local market participants to start talking about price increases,” a source said.

A second market participant said that there are still a lot of contradictory moves: “I just received a 10% increase from some participants, while others offered a discount.”

There is a more positive perspective for the second half of the year in Mexico, a third source stated, because presidential elections are over and the market already knows what to expect from the government. “Unpredictability is always negative for the business environment, while agricultural exports are still not very high in Mexico, but there is economic growth projected for Mexico and the containerboard market will follow that, we are already having a better idea compared with 2023.”

… there is economic growth projected for Mexico and the containerboard market will follow that …

Considering data from Mexico’s National Statistics Institute INEGI, containerboard imports improved 13.7% in the first quarter of 2024 year on year to 357,941 tonnes. The largest supplier was the USA with 233,924 tonnes of kraftliner and 108,042 tonnes of recycled containerboard.

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