Domestic testliner and fluting prices keep heading north in the GCC area

Prices of locally produced containerboard in GCC area continue to rise in February, following significant hikes in January. This article explores the market dynamics and price increases affecting Saudi Arabia and the UAE, shaping the regional containerboard landscape

Constrained international shipments contribute to higher prices

Prices for locally produced containerboard continued to rise in the Gulf Cooperation Council (GCC) countries in February, after our indices registered increases of approximately $20 per tonne in January.

In the largest market, Saudi Arabia, many contracts are inked for the quarter, and price contributors already reported increases of varying sizes in January. This month, contacts said that higher prices continued to filter through as the quarter progressed. In the second-largest market in the region, the United Arab Emirates (UAE), prices are usually discussed on a monthly basis, and a clearer step-by-step approach was seen there. After increases of $20-30 per tonne in January, hikes of around $10 per tonne, sometimes more, were reported in February. A few contacts said prices were unchanged from January into February.

As a result, PIX Testliner GCC moved north by 10.79 dollars, or by 2.51%, and settled at 440.14 USD/t. PIX Fluting GCC rose by 10.99 dollars, or by 2.72%, closing at 415.74 USD/t.

Logistics and demand behind the hike

The explanations for the February movements were similar to those in January. The Red Sea shipping crisis remains a major driver as it continues to cause delivery delays and higher shipping costs, although some contacts noted that the situation had become clearer in February compared to December and January. A number of contacts said that local transport in Saudi Arabia also remains constrained as more shipments continue to go to the port in Dammam rather than in Jeddah on the Red Sea coast. In addition, fuel and diesel costs have increased since the start of the year, when the energy company Saudi Aramco announced it would raise prices for feedstock and fuel.

Corrugators keep facing limited options for GCC-made testliner and fluting, as imports from Europe and India are still said to be down. Egypt, which had been mentioned as an alternative source of containerboard in the past few months, was not talked about as often in February.

Finally, Ramadan, which will start in March, has given demand a boost; most contacts agreed, although there was a range of replies to the question of how much – some seeing a large positive impact, while for others, it was smaller.

New RCP export fee in the UAE

The UAE has announced export fees on industrial waste, including recovered paper (RCP) under the HS codes 470710 and 47079090. The RCP export fee, made public at the end of January, is 140 UAE dirhams or some $38 per tonne. Some UAE-based contacts said prices of old corrugated containers had already come down in February as a result.

PIX indices covering the two main recycled fiber-based containerboard grades, produced in and delivered to the GCC, were launched in June 2023. The GCC countries include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

Interested in learning more about paper packaging market developments and trends in the industry? Speak to our team today and find out how we can help you stay ahead of the competition.

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