Containerboard prices in NA rise again, up $30-$40 amid mixed demand and high cost inflation

Amid inflation pressures, the North American pulp and paper market is seeing significant hikes in containerboard prices, underscoring the critical importance of price data in the industry

Domestic linerboard prices rose $30/ton and $40/ton in North America as producers again sought price relief from inflation, even as some buyers said demand wasn’t strong enough to pay more for linerboard or corrugated boxes.

Levels for 42-lb unbleached kraft linerboard, 35-/36-lb High Performance linerboard, and 30-/31-lb recycled linerboard all rose $40/ton, to $900-910/ton delivered for the 42-lb, $910-920/ton for 35-/3b-lb, and $800-810/ton for 30-/31-lb. White top linerboard also increased, by $30/ton to $1,180-1,190/ton. Corrugating medium rose $40/ton to $790-800/ton, the same increase amount as for the brown linerboards.

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These increases came after announcements from the six largest North American integrated producers of mostly $50/ton and $60/ton increases for brown linerboard, an $80/ton rise for corrugating medium, and $30/ton and $50/ton increases for white top linerboard. North America’s No. 1 major integrated producer International Paper announced 10% corrugated box and 12% corrugated sheets increases as well.

Seventy percent of buyers and sellers reporting to Fastmarkets PPI Pulp & Paper Week confirmed higher pricing, ranging from $20-30/ton to $40-50/ton for kraft and recycled linerboard. Most reported linerboard and medium price increases at the same amount, the $40, and some even reported 26-lb semichemical medium as much as $150/ton less than 42-lb unbleached kraft linerboard.

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“It’s a cost/margin-driven increase. … Our (box shipment) lead times today are longer than they were two months ago. It’s busy, very busy,” said a contact with a large integrated company.

A small independent called the “additional cost today” for manufacturing and delivering product “overwhelming.”

Even with a price increase, one board supplier in the West told of coming up $20/ton short in covering his cost for his delivered tons for this and next month.

Contacts at several large integrated firms told of an improved box volume per-day pace in June from May and noted increased demand of about 2% to 4% in June, year-over-year. One noted a 4-5% increase in June volume from May’s per-day shipments.

“It’s continuing to get slightly better,” a contact with a national boxmaker said. “You’re not seeing a +10% type increase (in box shipment) demand. But it’s steady.”

Others, though, were left with their heads spinning over the increase.

Mills are crying that they are unprofitable…. I don’t see (the June price increases) as being justified…

“Mills are crying that they are unprofitable …. I don’t see (the June price increases) as being justified. … Supply is definitely available,” said a buyer in the Midwest who did not plan to fight the increase.

Another described today’s market condition, as various others did, as “somewhat stagnant demand … (with) an excess of supply.”

“If you want more tons, you have it,” said a contact for a large board and corrugated company. “If you want a slight (pricing) adjustment, you have it.”

Still, the contact added: “We’re trying to do everything we can to offset this higher cost and it’s not so easy.”

He added that “no one wants to lose (box order) volume,” a refrain heard every month this year by P&PW.

Astonishingly, 20% of buyers and sellers this week reported gaining lower pricing this month, compared with last month – just as the pricing increases were in motion.

One customer told of reducing linerboard prices by about 5-10% from a bidding process. Bidding was not broadly occurring, though, contacts told P&PW.

How this all portends for a pass-through of the linerboard increase remains unclear.

“We haven’t heard about this box increase from one (integrated boxmaker),” a national account company official who buys boxes said at mid-week. “There’s mixed signals.”

The $900-910/ton pricing for benchmark 42-lb kraft linerboard was $30/ton less than the all-time highest P&PW price range for the 42-lb. That highest range of $930-940/ton happened in March 2022 – after a fourth increase on linerboard in 17 months from late 2020 through to spring 2022. These increases occurred as a COVID condition caused a major increase in consumer demand including from work-at-home rules and from up to $5 trillion in US government cash support to roughly 80% of Americans.

It was the fastest, largest price increase run ever, with the four increases totaling $220/ton in North America’s domestic open market, according to P&PW’s price survey. After the run-up, the benchmark kraft linerboard price level then dropped by $110/ton in about a year’s time through late 2023 in North America’s open market. During the decline, US actual box shipments plummeted by 8-9% year-over-year for the six-quarter period from third-quarter 2022 through the end of 2023.

Today, $80/ton of that $110/ton lost was recovered from a February $40/ton increase and this month’s additional $40/ton increase, according to P&PW’s survey.

Pricing for 42-lb kraft linerboard domestically is now up 26.4% this month when compared with its price before the pandemic.

“This (June linerboard price) increase has been more firm compared to the 1Q increase,” a containerboard supplier said.

“I believe all the mills have much stronger order backlogs currently. Box demand is noticeably up this month,” the supplier said.

‘Flip of a coin’ increase? 

Still, a Midwest boxmaker asked, speaking to the unusual market condition of two price increases in five months during an inflationary time with less-than-robust box demand across the US: “Is the increase justified and warranted, and how are we measuring those parameters? This one is a flip of a coin (increase).”

“Does demand apply anymore – it used to? The mills need it (the containerboard price increase). They’re going to drive it. It just seems supply and demand has been thrown out the window. The whole dynamics have changed so much: There’s now soft demand – and a price increase,” the boxmaker said.

“Whatever the increase is, it will go over like a lead balloon with customers,” added a boxmaker in the East who did not oppose paying higher linerboard prices this month.

 Nearly three-week mill shutdown

Kruger restarted its 400,000 tons/yr machine No. 10 at the Trois Rivieres mill in Quebec, as of at least June 20, a company official and market contact said. The machine makes high performance lightweight recycled linerboard. A strike by workers shut the operation on May 30. Contacts said the two sides reached agreement on June 19. Kruger Valmet No. 10 was converted to making recycled linerboard in the spring of 2017, according to Fastmarket’s Mill Benchmarking data. The No. 10 makes XTR recycled linerboard, which the company says has a high strength to basis weight ratio.

SupplyOne 

said it acquired Columbia Corrugated Box Company (CCB), which makes corrugated products and protective packaging, and does “high-resolution” printed packaging solutions in the Pacific Northwest. Founded in 1967, CCB operates facilities in Portland and Seattle, and Medford and Eugene, OR. “Adding a SupplyOne presence to the West Coast further enhances our ability to service customers nationwide, in addition to on-going expansion of our North American coverage,” said SupplyOne CEO Todd Renehan, in a release. “As part of SupplyOne, we are looking forward to taking the business to the next level with international scale, while maintaining the high-touch service our customers expect,” said CCB COO Roggy Pflug.

This article was taken from PPI Pulp & Paper WeekSpeak to our team to learn more about our news and market analysis, prices, forecast and more.

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