Middle East: First quarter closes with slight March increase in GCC-area testliner and fluting prices

Congestion at Port of Dammam and tightening truck availability reported in Saudi Arabia

Prices for some containerboard produced in the Gulf Cooperation Council (GCC) countries moved north once again in March. Manufacturers have been pushing prices up throughout the first quarter on the back of limited supply, following logistical difficulties owing to the Red Sea shipping crisis, and improved demand ahead of and during Ramadan.

Our price contributors reported a mix of stable or higher prices, with most increases no larger than 10 USD/t on average. As a result, PIX Testliner GCC rose by 3.82 dollars, or by 0.87%, closing at 443.96 USD/t. PIX Fluting GCC headed higher by 6.86 dollars, or by 1.65%, and came to a rest at 422.60 USD/t. Our benchmarks have increased by about 35-40 USD/t during the first quarter.

Among the two largest markets, Saudi Arabia and the United Arab Emirates (UAE), the increases have tended to be larger in the former and smaller in the latter. Several contacts described the Saudi Arabian market as more protected, owing to some extent to import duties on testliner and fluting also from other GCC countries and a traditionally larger presence of international traders and importers in the UAE.

Saudi Arabia has also been more impacted by the Red Sea shipping crisis, as the port in Jeddah has lost traffic since December. The port in Dammam has instead seen an increase in shipments, and by March, many contacts remarked on the congestion in the port. With more traffic heading to Dammam, on Saudi Arabia’s east coast, trucks are needed to deliver goods to the west coast, and several sources said truck availability has become increasingly strained. This, along with higher fuel costs, has pushed transport costs in Saudi Arabia up.

Dammam’s congestion is also felt elsewhere, with some goods destined for Saudi Arabia shipped to the Jebel Ali Port in the UAE, or vessels waiting in the Hamad Port in Qatar for their turn to arrive in Dammam.

Furthermore, multiple sources discussed the increasing difficulties moving paper from the UAE to Saudi Arabia by land, linked to a system change at the border. This has led to some testliner and fluting traveling between the two countries by ship instead. “Earlier, it used to take two days to clear the border, but recently, it has gone to 10-15 days,” one contact remarked.

Demand is healthy. These are levels we haven’t seen in 2023.

As for consumption, most sources said it has remained good in March. “Demand is healthy. These are levels we haven’t seen in 2023. I expected during Ramadan there would be a slowdown, but demand continues [to be strong],” a contact noted.

However, testliner and fluting consumption is anticipated to decline during the Eid Al-Fitr holiday at the end of Ramadan when a lot of people take some time off. In Saudi Arabia, for example, the government has announced holidays for public and private sector employees from April 8-11. While many containerboard mills in the region are set to continue production, some corrugators are going to wind operations down for a few days.

On the pricing side, sources reported discussing potential increases for April or the second quarter.

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.

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