Linerboard prices fall another $20 on domestic market in North America

Box contacts are unsure about what March will bring as linerboard prices tumble for four straight months

US unbleached kraft linerboard and recycled linerboard prices tumbled in February for the fourth straight month in North America.

Price levels on the domestic open market in North America declined $20/ton on 42-lb unbleached kraft linerboard, dropped by $20/ton for 35-/36-lb high performance, and decreased $20/ton for 30-/31-lb recycled linerboard, according to buyers and sellers in Fastmarkets’ PPI Pulp & Paper Week price survey. Also, 26-lb semichemical corrugating medium was down by $20/ton.

P&PW reported top-of-range domestic prices of $870/ton for 42-lb kraft linerboard, $880/ton for high performance linerboard, $780/ton for 31-lb recycled linerboard, and $760/ton for semichem medium. The lone containerboard grade either domestically or in export to remain unchanged was 42-lb white top linerboard, which again stayed at $1,170-1,180/ton.

Export pricing for US kraft linerboard also continued to sink at the same time. Prices to four major destinations were down $10/tonne to $30/tonne this month. There were ample reports on much lower priced US 42-lb kraft linerboard in certain markets, including $700/tonne delivered in Ecuador and at least $100/tonne less delivered to China (for 175-g US kraft linerboard).

There were similar reports on the domestic open market in North America, where contacts in some cases spoke of receiving an additional $10/ton to $30/ton more in discounts so far this year – above and beyond the price reductions already reported to P&PW in its survey as of this week.

Demand downturn from destocking

Since a second-half US corrugated box demand downturn resulted from destocking, the domestic linerboard prices came under pressure and P&PW’s survey dropped first in November 2022. The November decline was the first one for linerboard in the domestic North American open market in 3½ years.

Since October on the domestic market, kraft and high-performance linerboard pricing is down a combined $70, and recycled linerboard is down $80/ton. Corrugating medium is down by $110/ton.

These recent linerboard decreases equal one-third of the $220/ton in pricing increases by producers over 17 months from late 2020 through the end of first-quarter 2020. It was during 2020 and 2021 that US actual box shipments surged and grew by 5.7%, a 27-year high. Federal stimulus funding of $4.9 trillion and Covid-19 influences increased box demand as did work-at-home rules at the time. US real GDP shot up by 5.9% in 2021 on an annual level basis and grew at just 2.1% last year.

Some contacts, in a minority according to the survey, again tried to maintain that the market was stabilizing and that linerboard price declines had evaporated. Yet, corrugated box demand was showing, at best, only small signs of pickup – boxmakers, and even linerboard suppliers, were still at a loss to portend how the business might do in March. While decreases in previous months came from 60% to 70% of buyers and sellers reporting lower prices, this month’s decreases resulted from a slight majority, according to the P&PW price survey results.

Pessimistic demand outlook ahead

Looking forward two weeks, one contact at a large integrated company admitted that what he saw on the demand runway for his company was no better than “day to day, week to week.” During the surge, the demand picture runway stretched out to at least four to seven weeks ahead based on orders and deliveries.

“I can’t at this time say if it’s going to turn around (in March). People are trying to find out how to pay for gas and food,” the contact added.

“(Customers) kind of have the same volume for March” as they did in February on a per-day average basis, another smaller integrated company leader said.

“There are no (order or demand) increases I can see,” one boxmaker contact told P&PW on Feb. 16.

It’s a “tough call” for March, a boxmaker contact in the West said at the end of this week.

“As we look out, we’re not looking to stack up on our forecast,” one sheet plant manager in the East explained, noting a conservative buying and selling approach today because of economic uncertainty. “Our inventory was set up for a slower season (in 2023). Where’s the new normal going to be?”

Various contacts in different parts of North America said that February on a per-day average basis was slightly better than January, which was considered a weak box shipment month along the lines of December. December US actual box shipments totaled 30.124 billion ft2, the Fibre Box Association (FBA) reported. That’s the lowest monthly total since February 2019’s 29.7 billion ft2.

Contacts believed that February increased slightly because box plants, after reducing inventory in the last quarter of 2022, came back to add a slight amount of stock back at their plants.

Containerboard inventory at corrugated container plants was down 13% in December and by 340,000 tons at end of last year, compared with the corrugated plant containerboard inventory around mid-year in July 2022.

“February was not as bad as I thought,” a linerboard supplier said, of customer box demand, and “things aren’t good (demand-wise) but at least now the market is a little stable … with a little bit of steady cutup.”

March has three more shipping days than this month, according to the FBA. In actual volume, March will be much stronger shipment-wise than February, but contacts were uncertain about how per-day averages for March would compare.

This article was first published in PPI Pulp & Paper Week, the industry’s most trusted pulp and paper market news and prices for North America. Speak to our team to find out more and subscribe to our newsletters.

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