Large integrateds line up with $50/ton linerboard rise for Nov. 1-2; box price hikes so far at 9-10%

Producers that can make more than 85% of North American containerboard announced $50/ton price increases for linerboard and corrugating medium, effective Nov. 1 or 2.

North America’s second biggest boxmaker WestRock announced the containerboard increase along with a 9% increase for its boxes and an 11% increase for its sheets, effective Nov. 1.

The containerboard increase for the open domestic market in the US and Canada would be the first one in more than two and half years, if implemented.

Six large integrated producers were quick moving with their increases that began with International Paper on Sept. 25 and ended with WestRock on Sept. 30. Five announced on Sept. 25 and WestRock on Sept. 30. The six largest producers (IP, WestRock, Packaging Corp of America, Georgia-Pacific, Pratt Industries, and Cascades) with the combined capacity share of the more than 85% announced their increases in a period of six days. Still, the increases from five of the six were for linerboard and medium only, and not for boxes, other than by WestRock. Also, one independent boxmaker in Southern California announced a box increase on Oct. 1.

“The primary commentary has been the steep [upward] demand for boxes is driving the current situation. Some are outsourcing boxes (not enough box capacity) and pricing is not an issue — folks will pay whatever it takes to get boxes,” a contact with an integrated producer told Fastmarkets RISI’s PPI Pulp & Paper Week on Sept. 26.

At the end of this week on Oct. 1-2, industry contacts in both the US East and West claimed to P&PW that box demand remained “strong” to “very strong” in North America.

One told of “4-5 week backlogs” in some cases at box plants and the “word ‘allocation’ is being used again [because some] orders are out through November.”

“The supply chain is very tight. Many mills are shipping late and some have even canceled orders,” a West Coast supplier said. “I have not seen or heard of any let up in box demand.”

Toward that point, and in a surprising development, the independent box maker in Southern California, Jellco Container, was the first to actually announce a US box increase. Jellco’s increase, effective Nov. 1, is 10% for its boxes. The company announced the increase early this week. Jellco operates one sheet and one box plant in Southern California.

A day later, WestRock was out with the 9% box price increase. WestRock’s estimated share of US annual actual shipments is about 22%.

Contacts this year have talked consistently about some decline in average box prices, at about 4-5% in 2020. Box pricing came under some pressure in North America in a fragmented regional way in April and May, when US box shipments also declined. That decline in shipments occurred as a middle part of the story this year to what was a surge in March from a buying frenzy due to the novel coronavirus and then a second surge, so described by industry contacts, in the June through August period. Two weeks ago, producers and box makers claimed that they extended backlogs for orders of linerboard as well as boxes. Some manufacturers could not handle all their box business and orders shifted to others. Also, contacts said several major integrateds were hungry for open market linerboard.

The increase is to come after US linerboard prices dropped $40, in batches of $10/month declines in March, May, and June 2019, and January 2020, according to P&PW‘s survey.

One concern from some players in the last week was trying to implement the increase after the August US containerboard operating rate was 92-93%, but contacts also believed the operating rate would increase in September, because of the large backlogs at mills, according to contacts.

Integrated and box contacts also claimed that their cost to do business since March, with the virus, has increased. The increased cost comes from some higher labor as well extensive sanitizing and other cleaning programs now in place to try to avoid spreading the virus among workers.

• Among other companies identified with linerboard and medium increases on Nov. 1-2, other than the largest six producers, were Hood Container, Greif, Kruger, McKinley Paper, and the Corrugated Supplies Alsip Mini-mill.

• Green Bay Packaging, which is to start up a large new recycled containerboard machine in first-quarter 2021 in Green Bay, WI, announced that it acquired Third Dimension (TD), which is in corrugated packaging, molded foam packaging, and four-color digital printing, the companies said. TD is headquartered in Geneva, OH, and has operations in Middlefield, OH. “This acquisition gives us the opportunity to grow our business in several states,” said Green Bay Packaging pres/CEO Will Kress, in a release.

• The startup of Grupo Gondi’s new 400,000 tonnes/yr machine No. 7 in Monterrey, Mexico, has been delayed and is now scheduled to take place in the last days of October, the company’s CEO Eduardo Posada confirmed to PPI Latin America. “We expect to deliver the PM’s first commercial volumes in the first half of November. The project is being concluded in about 24 months of construction works, which is still a very good timeframe considering the effects of the pandemic,” said Posada, who will be one of the CEOs featured at the FastmarketsRISI International Containerboard Conference 2020 Virtual Conference on Nov. 5. Posada said that the delays to starting up the 400,000 tonnes/yr PM were mostly related to the COVID-19 pandemic. The new Voith PM was initially scheduled for May startup, but access of technical workers involved in the project was difficult due to the pandemic, PPI Latin America reported. The number of workers at the mill site is also limited due to health prevention measures.

• Nine Dragons Paper said it will develop a second virgin pulp mill. The company plans to add 600,000 tonnes/yr of wood pulp capacity to its Shenyang city mill in northeastern China province. Nine Dragons is the second largest containerboard producer by capacity in the world, and will be honored with a Fastmarkets RISI special recognition award on Nov. 4 at the virtual International Containerboard Conference. The company is being recognized for its business pivot, while facing a ban on its most important raw material for making containerboard, recovered paper, to further develop new containerboard and pulp capacity in both the US and Southeast Asia.The planned pulp capacity in Shenyang is to be commissioned by the end of 2022, consisting of 300,000 tonnes/yr of semi-chemical pulp and 300,000 tonnes/yr of bleached chemi-thermomechanical pulp, a company executive told Fastmarkets RISI. The semi-chemical pulp is to be consumed on-site for recycled containerboard production at the 950,000 tonnes/yr mill. The BCTMP will be sent to Nine Dragons mills in China for boxboard mid-layers. Nine Dragons also is building 550,000 tonnes/yr of wood pulp capacity and 750,000 tonnes/yr of packaging board capacity at a greenfield site in Jingzhou city, Hubei province. In the USA, Nine Dragons’ ND Paper is to start up a new corrugated box plant before yearend in Wisconsin.

• Mondi and SCA set Euro 50/tonne increases for their brown kraft linerboard grades in Europe, effective Nov. 1, PPI Europe reported. Also, IP announced plans to explore strategic options for its packaging operations in Turkey. “While Turkey remains an attractive corrugated packaging market, after careful consideration, we have decided to initiate a review of strategic options for our packaging operations there including the potential sale of the business,” said IP pres for Europe, Middle East & Africa (EMEA) Jay Royalty. “We remain committed to serving our customers in the region. This review of strategic options does not impact our corrugated packaging businesses outside of Turkey, and it is IP’s intent to continue to invest and sustainably grow our EMEA packaging business over time.”

• Amazon is to spend $400 million in the next five years for printer equipment from high-speed inkjet printer Kornit, a media report said. Amazon committed $250 million in existing Kornit products, such as digital printers and inks, and $150 million in “future products.” Amazon has continued to grow its digital printing capacity over the last several years.

• Cascades is launching a 100% recycled and recyclable thermoformed cardboard tray for fresh food packers using automated equipment in North America. “This thermoformed tray delivers a unique innovative food packaging solution that was developed entirely using a circular economy approach and ecodesign principles,” according to Cascades. The tray is composed of 100% recycled fibers, mostly sourced from post-consumer sources certified “Recycled” under the Forest Stewardship Council (FSC) standard. In addition, “it is designed with a patented water-based (SurfSHIELD) coating that protects it from moisture without compromising the recyclability of the cardboard,” Cascades said.