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Gulf Cooperation Council (GCC) region prices for recycled fiber-based containerboard (RCCM) were mostly flat to lower, according to pricing data received for Fastmarkets’ PIX indices published on Tuesday February 3. The indices for locally produced brown testliner and fluting both fell in January.
Fastmarkets calculated its monthly PIX Testliner GCC index at $462.38 per tonne on February 3, down by $1.17 per tonne (0.25%) from $463.55 on January 7.
Fastmarkets calculated its PIX Fluting GCC index at $438.58 per tonne on February 3, down by $2.00 per tonne (0.45%) from $440.58 on January 7.
Containerboard demand was mostly stable to down during January, according to market participants across the GCC region. There was a lack of enthusiasm, when discussing the market ahead of Ramadan in the region.
In Saudi Arabia, which is the largest market in the region, the market participants were somewhat confused as to why they were not seeing a clear upswing in demand in January, given that the year-end lowering of stocks has reportedly finished and Ramadan is not set to begin until mid-February.
“We should be in the peak of our season now [ahead of Ramadan], but even the Ramadan [preparation] season seems very quiet here. Not just in our industry but for everything,” a Saudi-based corrugator told Fastmarkets.
There is no single clear explanation as to why demand has not increased more ahead of Ramadan, but one possible factor is the ongoing cash shortage in Saudi Arabia, which continues to put pressure on the market. Due to delays in payment collection and lower cashflow, companies cannot supply additional material, thereby further suppressing the demand.
Behind Saudi Arabia’s cashflow and liquidity pressures have been weaker oil revenues, combined with the high costs of the Saudi Vision 2030 – a long-term economic plan to reduce reliance on oil and to build new non-oil industries. Because the government heavily relies on the oil income to fund its projects, the strain has pushed the Public Investment Fund (PIF) to find more domestic capital, which has included asking some of Saudi Arabia’s wealthiest families to invest in local projects, according to Bloomberg.
“Our production gets impacted and our costs increase because we don’t get paid by the customers, but we have to pay to our suppliers on time. We then have to take loans from the banks,” a Saudi corrugator said.
According to participants, this cashflow challenge is affecting not only the containerboard and corrugating industry but the wider Saudi economy.
Another factor affecting the supply-demand balance in Saudi Arabia, could be the increased competition between local Saudi producers, because new entrants are causing demand to spread across a wider pool of players now, a source said.
Containerboard capacity has grown in Saudi Arabia, with Red Sea kicking off trial production on its PM2, which has a capacity of 178,000 tpy and Al Jawdah’s PM1, which increased the containerboard capacity by 72,000 tpy in 2025.
One corrugator reported seeing a modest uptick in demand for products month-on-month in January.
“Once the inventory is out [after December], then they build stocks for Ramadan,” the corrugator said. “Not a big difference, but slightly better than [December],” he added.
In the United Arab Emirates (UAE), demand was described as more stable during January and sources said that there was excess containerboard availability in the market.
“We don’t get to see the urgency from the customers like we used to see earlier during the time of Ramadan preparation,“ an Emirati source said. “Customers have a lot of options, which doesn’t put them under that much pressure and, in turn, we don’t get that pressure for supplies,” the source added.
Al Rabeh Company for Packaging has finished the construction of its second corrugating machine at its existing plant in Jeddah’s third industrial area. The new corrugating line will have the capacity to produce 6,000 tonnes a month, with an average speed of 300 m/minute.
“We will be in the market in February,” Al Rabeh’s general manager Amin Al Kholani told Fastmarkets.
Market participants reported flat recovered paper (RCP) prices during January. However, RCP prices rose incrementally during the second half of last year due to tighter RCP availability as additional RCCM capacity has come online in Saudi Arabia.
“[RCP] prices are still the same, although I understood that in Europe and worldwide prices are dropping or have dropped already, while here in Saudi they have not,” a Saudi source said.
Similarly, in the UAE, RCP prices were also reported to be fairly flat, with some noting high RCP availability in the market as the reason behind stability in prices.
However, one market participant reported a small uptick in RCP prices, possibly due to some increased demand from India.
European containerboard producers have been less active in the UAE and Saudi Arabia since December, although they still remain present in both markets as some corrugators reported receiving offers from them. Despite their reduced presence, European mills are still the main competitors alongside regional GCC-based containerboard producers during January, most market experts said.
Some Saudi corrugators noted that European containerboard is less attractive when considering freight costs and long shipment times.
“We don’t want to order now and the paper will arrive after three months,” a corrugator said.
Containerboard producers in India continued to ship to the UAE. However, quality issues and their prices – almost matching the local ones – have made them less competitive than regional and local mills, sources said.
Land-based shipment costs increased in January after the Saudi government raised diesel prices by about 7.8% per liter compared with the previous year.
Many market participants said transport companies had already implemented price hikes on their shipping contracts, but some have reported no changes yet in their transportation costs as they still have a valid contract that was made prior to the announcement of the diesel price increases.
“Maybe if we will renew the [transportation] contracts, they will offer new prices but until now we have the contracts with the same [old] prices,” a Saudi-based contact said.
This is particularly important for GCC containerboard trade, as most of the RCCM is transported by road within the region.
The diesel price increases are expected to impact production lines first, as both containerboard producers and corrugators use fuel in their production.
“Our costs have gone up, especially the utility costs where we use diesel for boilers,” a source said.
Shipping carrier Maersk has announced its return to the trans-Suez route for its MECL service, which connects the Middle East and India with the US East Coast, because stability in the Red Sea has improved. This return will allow faster transit time between Asia and Europe via the Suez Canal, the Red Sea and the Bab el-Mandeb Strait.
In terms of international freight rates, Drewry’s World Container Index (WCI) dropped from its latest peak on January 8, falling by approximately by 18% from $2,557 per 40-foot container then to $2,107 on January 29.
Looking ahead, GCC-based containerboard producers and corrugators expect demand for packaging materials to slow down a bit during the second half of February, with Ramadan estimated to begin around mid-February. Demand is expected to take a dip as working days will be shorter and consumption will wind down in the region. “Ramadan [fasting] coupled with the cold season [in the region], will probably slow down demand because, in winter, people don’t drink as much soft drinks or water compared to the summer,” a Saudi-based corrugator told Fastmarkets.
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