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Kraftliner prices were unchanged from April in Germany and France, but they dropped by Euro 20-30/tonne in Italy and Spain during the course of the month, and by up to £20/tonne in the UK, as they came under sustained pressure from cheaper American supply and the gap with pricing for recycled containerboard (RCCM).
With supply from overseas remaining high, input costs relatively low and demand lackluster, contacts expect further kraftliner price declines in most markets in June and/or July as the market catches up somewhat with the steeper drops that have already rolled out for RCCM.
Despite low RCCM operating rates, supply continued to be high. Contacts reported that new capacity came onto the German and Italian markets with the start of sales from Norske Skog’s 210,000 tonne/yr BM in Bruck, Austria, and more new capacity is reported in the near term. Meanwhile, demand was slow, in line with general low consumer activity. Contacts also indicated RCCM demand was depressed over the month as some customers worked through stocks they accrued in late April after Hamburger’s ultimately fruitless price hike announcement for May.
However, prices were mostly steady across Europe, as RCCM mills reported that at current levels they are operating close to or under margins. The exception was in Italy, where contacts reported that high-end prices for some imported RCCM fell by up to Euro 20/tonne.
Folding boxboard prices stayed largely flat in May, though one producer with open-ended contracts reported some small reductions of Euro 20-40/tonne off the high end of their pricing and another producer said that price reductions are starting to be visible. Demand for board remained quiet, “bloody quiet,” according to one producer, who added that his fellow producers are beginning to get nervous.
As an apparent sign of the times, Metsä Board reported that it would be entering into change negotiations for potential temporary layoffs at seven of its mills in Finland. The company said that it would be preparing to adjust production to compensate for low delivery volumes and the layoffs could last for 90 days and affect a total of 1,100 employees. All the same, plastic replacement projects continued apace and anticipation for the second half of the year stayed fairly strong from many who were surveyed.
White-lined chipboard prices slumped again in May by some Euro 40-65/tonne as better demand still failed to materialize, frustrating market players who had expected the situation to have improved by this point. There is still far too much stock of board and finished products in the pipeline, according to market players, and multiple mills continued to take selective downtime as a result, with many extending the already long holiday weekends in May observed by many countries in Europe. At the beginning of the month, Italy’s RDM Group announced that it was set to acquire Swedish WLC producer Fiskeby. The deal is subject to regulatory approval and is expected to close by Q3 of this year.
This article was first published in our PPI Europe newsletter. Find out how you can access the latest market developments in Europe directly from your inbox by speaking to our team.
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.