GCC region prices for recycled fiber-based containerboard (RCCM) showed mixed trends, with some prices remaining stable in April, according to Fastmarkets’ packaging PIX indices.
Indices for locally produced brown testliner and fluting diverged. The testliner index slightly decreased, while the fluting index saw a small increase.
Fastmarkets’ PIX Testliner GCC index dropped by $0.10 per tonne, or 0.02%, closing at $476.75 per tonne.
Meanwhile, the PIX Fluting GCC index increased by $0.89 per tonne, or 0.20%, reaching $454.97 per tonne.
Post-Ramadan packaging demand flat
Contacts in the GCC region described containerboard demand as mostly stable or normal during April. Some reported a slight improvement compared to March, citing the post-Ramadan period. The end of Ramadan marked the return of regular working days and the end of reduced working hours.
But one buyer from Saudi Arabia told Fastmarkets that he observed an absence of the usual seasonal uptick in demand. This was despite the onset of summer and rising temperatures in the region, which typically pushes up demand for some packaging products.
“In March [demand] was slightly lower because of Ramadan. We are in April now, the temperature outside is now 40-45 degrees Celsius and we still don’t see the usual demand for soft drinks or water cartons that usually picks up during summer,” the Saudi Arabia-based buyer said.
“We are not sure whether our competitors – or probably some of the competitors – are trying to increase their market share by lowering the prices. This is what we heard from a few customers,” the buyer added.
Recovered paper (RCP) prices continued to be more or less stable in Saudi Arabia, according to contacts. Participants in the UAE reported lower local RCP prices in April due to stricter export restrictions. The updated export fees have been in effect since February 13, influencing local RCP prices.
In terms of international freight rates, most of the contacts reported stability in April.
Drewry’s World Container Index continued a gradual decline, dropping 3% from March 27 to $2,091 per container. This decline occurred by May 1, following a brief uptick in mid-April. Drewry’s World Container index has been on a consistent downward trend since early January.
Tariffs potentially creating new opportunities
There were expectations among contacts on the possible impacts the US import tariffs could have on the GCC region. The US placed a 10% tariff on all GCC countries.
Some packaging market participants believe there will be no major impact on the containerboard market, for two key reasons. Firstly, many suppliers in the GCC region are not exporting to the US, so direct effects seem unlikely.
Secondly, the GCC countries are not involved in the US-China trade war, minimizing their exposure.
However, some participants remain uncertain and await clarity after the 90-day tariff pause ends, sources said.
“Uncertainty is always a worry because you are confused. [You] don’t know what’s going to happen and you can’t plan. We have to wait and see what happens,” a contact said.
One producer told Fastmarkets that their business could potentially benefit from the imposition of tariffs. If the trade tensions between major economies like the US and China escalate, they could disrupt existing trade flows. If China faces export barriers with the US, it could create a demand gap. Third-party suppliers from uninvolved countries, including GCC exporters, might fill this gap, creating new opportunities, sources told Fastmarkets.
On the other hand, another buyer was anticipating drastic upward changes in shipping costs.
“We know that the whole [tariff] thing is going to [cause an] imbalance [in sea shipments],” the buyer said.
As for inland shipments in Saudi Arabia, transportation is reported to have stabilized with the transport quotations reflecting the increased fuel prices announced at the start of the year. However, one buyer reported pressure and high demand on trucks in the local Saudi market.
“Demand for logistics is too high. Compared with the previous month, it has increased a little bit around 5-10% in Saudi Arabia. There are many new [logistic] companies [entering the market] to increase their capacity to find more trucks,” the buyer said.
Meanwhile, the road traffic between the UAE and Saudi Arabia has also returned to normal, after the increased activity during Ramadan, a producer said.
Indian, European RCCM not competitive in the GCC
Discussing the competition in the GCC region, Indian and European suppliers have had minimal presence in the regional packaging market, but their limited offers were not considered as competitive due to higher RCP costs in Europe and India.
Meanwhile, in the UAE, Far East mills continued to be more active during April.
“The only competition that I am seeing [in the UAE] is from Far East suppliers, like Indonesia and Malaysia,” a contact told Fastmarkets.
On the other hand, in Saudi Arabia, one offer from South Korea was seen.
“We are being approached by outside mills. We got one [spot] offer from South Korea at a very very low price, but it was like 1,000 tonnes, limited quantity,” one buyer said.
Looking ahead, buyers and producers are discussing stronger demand citing higher temperatures and approaching summer, followed by Eid al-Adha celebrations on June 6. Additionally, in Saudi Arabia, the preparation for the Hajj (pilgrimage) season is beginning. Multiple contacts both on the buyer and seller side expect producers could try to raise prices in May on the back of increased prices in Europe, but this remains to be seen.
Interested in learning more? At Fastmarkets, we offer price data, forecasting and analysis for key commodities on a global scale. Speak to one of our experts to find out more.
