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Prices for recycled fiber-based containerboard (RCCM) in the Gulf Cooperation Council (GCC) region experienced minor changes in January, with locally produced testliner and fluting stable or slightly lower compared with December, against the expectations of Fastmarkets contacts.
Fastmarkets’ PIX Testliner GCC index edged down by $2.88 per tonne, or 0.60%, to close at $473.92 per tonne, and the PIX Fluting GCC index fell by $3.18 per tonne, or 0.70%, to $451.38 per tonne.
Producers faced pressure due to declining prices in Europe during the fourth quarter and some low-priced, locally produced volumes as well. As a result, they had to decrease their prices slightly in late December and early January and accepted larger volumes at lower prices, according to a Fastmarkets source.
But, in Saudi Arabia, the Middle East Paper Company (MEPCO) announced a price hike of $20 per tonne on January 13, effective immediately, citing increasing costs, with diesel prices going up in Saudi Arabia.
Similarly, in the United Arab Emirates (UAE), Union Paper Mill (UPM) also announced a price increase of $20 per tonne for February. Furthermore, published price hike announcements in Europe pushed producers in the GCC region to increase their prices, sources said.
Most Fastmarkets contacts said they were confused by containerboard demand in both Saudi Arabia and the UAE. Sources said that demand was more or less steady in January or a bit higher than in December, but the pressure that usually comes from customers in preparation for the holy Islamic month of Ramadan, set to start around February 28, was not reported.
“It doesn’t look like we are heading to the main festival of the region, which always brings good demand and business. This year, I am not seeing that,” one source told Fastmarkets.
There is no exact, clear explanation behind this atypical experience, but some contacts from Saudi Arabia speculated that one contributing factor could be the timing of Ramadan this year. In recent years, Ramadan has fallen during hotter seasons, which, combined with high seasonality in much of the GCC countries, has led to spikes in both demand and prices. But this year, Ramadan will begin in the cooler season, when overall consumption tends to be slower in the region.
Nonetheless, most of Fastmarkets contacts from the GCC region still described demand as slightly better in January compared with December.
In Saudi Arabia, sources reported stable recovered paper (RCP) prices in January.
Meanwhile, in the UAE containerboard market, participants said that RCP prices picked up from December and that they are elevated. While the reason behind the uptick was unclear, one source said that less collection in winter might be behind it.
In terms of international freight rates, one source said that prices came down in January, which is further supported by Drewry’s World Container Index, which retreated by approximately 14% from January 2 to $3,364 per 40-foot container on Thursday January 30.
As for inland shipments in Saudi Arabia, contacts described transportation as more expensive after diesel prices increased by 44.3% in early January. One contact reported receiving price increase announcements from their transportation companies in Saudi Arabia.
Purchasing Managers’ Indices (PMIs) in the non-oil private sector increased toward the end of 2024 in Saudi Arabia, the UAE and Kuwait. For Saudi Arabia, the highest PMI in 2024 was recorded in November at 59.0, up from October’s 56.9; it fell slightly to 58.4 in December.
The PMI in the UAE also started to increase since October, from 54.1 to 55.4 in December. For Kuwait, it increased from 52.7 in October to 54.1 in December. Meanwhile, in Qatar, the PMI was stable toward the end of the year, going from 52.8 in October to 52.9 in November-December.
Looking ahead, Fastmarkets sources expect demand to rise in February once preparations for Ramadan start.
“[February] is the last chance [for demand to increase] before Ramadan, [as] all people will take more stocks to prepare for Ramadan,” one buyer told Fastmarkets.
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