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The indices for locally produced brown testliner and fluting showed minor drops in February. Fastmarkets calculated its monthly PIX Testliner GCC index at $462.20 per tonne on March 3, down by $0.18 per tonne (0.04%) from $462.38 on February 3.
Fastmarkets calculated its PIX Fluting GCC index at $438.15 per tonne on March 3, down by $0.43 per tonne (0.10%) from $438.58 on February 3.
Containerboard demand was mostly stable to slightly up during February, according to market participants across the GCC region. The majority of the sources reported slightly better demand during the first half of the month, citing preparations for the Islamic holy month of Ramadan.
In Saudi Arabia, where a majority of contacts saw a small upswing in demand in early February, a few sources still said that the persistent cash flow shortages continued to limit companies’ ability to increase their order volumes, which in turn dampened containerboard demand.
“Everyone tries to secure their basic [market] share without any improvement in [underlying] demand,” one Saudi-based market participant said.
But another Saudi Arabian contact felt that the challenge was related more to credit terms than order volumes.
“In the Saudi market and in the GCC in general, the main concern is not how many tonnes you can sell or at what price. It is to be able to secure your money and collect your receivables, while not exceeding the credit terms,” the source said.
One corrugator reported seeing a modest dip in demand for its products month on month in February.
“Usually in the month ahead [of Ramadan], customers fill their inventory and during the actual month of Ramadan, the demand for food items lowers,” the corrugator said. “Everything is business as usual.”
In the United Arab Emirates (UAE), an uptick in demand was also seen by most contacts.
Market participants in Saudi Arabia reported unchanged recovered paper (RCP) prices during February. The tighter RCP availability seen during the second half of last year, after additional RCCM capacity entered the market, was reported to have eased during February, according to a Saudi Arabia-based industry expert.
“During the fourth quarter, Al Jawdah and Red Sea were building their [RCP] stock, so maybe in February they had enough stock and therefore there was good availability of [RCP],” the contact said.
In the UAE, RCP prices were more mixed, with some indicating stable to up in prices, possibly due to increased demand from India.
The presence of European containerboard producers in the GCC region has been declining steadily since December, with only a few market sources still reporting European mills as main competitors during February alongside regional GCC-based containerboard producers.
One Saudi Arabia-based corrugator noted that strong local availability of RCCM, with around 250,000 tonnes of new capacity entering the market in 2025, has reduced the need to look for offers from outside the GCC region.
“There are no offers [from outside Saudi Arabia] because there is ample capacity locally, so we are not seeking [RCCM] from abroad,” he told Fastmarkets.
Moreover, a new company, referred to either as The Pioneer or as Al-Awail, was reported to have started to produce recycled containerboard in Riyadh. Multiple sources have confirmed either seeing or hearing of test volumes sent to corrugators in Saudi Arabia in January and February. The contacts said that the mill was using a second-hand Indian PM, with a relatively small capacity.
Fastmarkets has not been able to confirm the startup with the firm.
Containerboard producers in India continued to ship to the UAE. But due to quality issues and their prices almost matching local ones, they were less attractive compared with regional and local mills, trade sources told Fastmarkets.
“For me, competitive [offers] mean that the prices should be less than local prices at least by $20-30 per tonne [delivered]. Because why would I import if I do not save some dollars,” a UAE-based corrugator said.
Geopolitical tensions in the Middle East escalated after US and Israeli forces launched strikes on Iran on February 28. In response, Iran’s Islamic Revolutionary Guard Corps (IRGC) issued radio warnings to vessels operating in the Persian Gulf, saying that “no ship is allowed to pass the Strait of Hormuz.”
Iran has not actually closed the strait, however, news agency Al Jazeera reported on March 1.
But following the warning, Iran confirmed that it had attacked an oil tanker for defying orders not to transit the strait on March 1, Turkish news agency Anadolu reported. By 1500 CET on March 2, two vessels had been attacked off the coasts of Oman and the UAE, while a third incident involved an explosion in close proximity to a vessel near the UAE, according to the UK Maritime Trade Operations (UKMTO) agency.
Global oil prices spiked amid the escalation, with Brent crude oil futures trades rising by around 8% from $73 spot price per barrel on February 27, to around $79 per barrel at 1500 CET March 2.
Pulp and paper markets were still gauging the effect of the escalation, according to market sources.
“It is very early to say [anything regarding the effect of the attacks in the Strait of Hormuz], but things will be more clear in couple of days,” a Saudi Arabia-based corrugator told Fastmarkets.
“Hopefully, everything becomes normal, but [so far] it is business as usual,” another UAE-based contact added.
The Strait of Hormuz is one of the world’s most important shipping routes, with about 20% of global oil and gas shipments needing to take this route in and out of the GCC region, according to multiple media reports.
As for the Red Sea, shipping carriers Maersk and CMA CGM announced on March 2 that they have suspended passages through the Suez Canal until further notice, with shipping traffic rerouted via the Cape of Good Hope. This followed Maersk’s announcement in mid-January that it would return to the trans-Suez route, having not used it after tensions in the Red Sea area started at the turn of 2023-24.
In January, the Saudi Arabian government increased diesel prices by about 7.8% per liter year on year. But market contacts did not report seeing any increases in pricing in logistics because transport companies were not ready to increase prices at the cost of losing market share.
“Demand and liquidity issues [in Saudi Arabia] are not allowing transport companies to increase their prices,” a Saudi Arabian contact said. “If there is good demand and growth plus healthy liquidity, I’m sure the prices would increase.”
This is particularly important for the GCC containerboard trade, because most of the RCCM is transported by road within the region.
Looking ahead, GCC-based containerboard producers and corrugators expected demand for packaging materials to slow slightly toward the second half of March for the final weeks of Ramadan, followed by the Eid al-Fitr celebrations, when people go on holidays.
“Once Ramadan finishes, we have [approximately] a one-week holiday, which is 25% of the month,” a GCC-based producer said. “No one is working during those days, there’s no one to receive material, and warehouses are closed, so it will affect consumption.”
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