Prices for recycled fiber-based containerboard (RCCM) in the Gulf Cooperation Council (GCC) region were mostly stable to higher in May, according to data reported for Fastmarkets’ PIX indices published on Tuesday June 3.
Fastmarkets’ PIX Testliner GCC index rose by $1.21 per tonne, or 0.25%, to $477.96 per tonne.
The PIX Fluting GCC index was unchanged month on month at $454.97 per tonne.
Demand heats up ahead of summer
GCC-based market participants described containerboard demand during May as mostly flat to slightly up month on month. A few contacts reported seeing the market picking up during May, with some citing higher temperatures in the region. One contact also mentioned the preparations for Hajj, the annual Islamic pilgrimage to Mecca in early June.
“Compared with April, demand in May is much better. Outside temperatures are now hitting 45-50 degrees Celsius, and probably this is why we are getting more and more orders from water and soft drink companies,” a Saudi Arabia-based buyer told Fastmarkets.
A second Saudi Arabian buyer said, “Yes, if you compare demand [in May] with April, it has improved by 10-15% [in number of orders] from last month,” adding, “The food manufacturing factories and water bottling companies are all preparing for Hajj.”
But one producer from the region reported an absence of the usual seasonal uptick in demand. This came despite the onset of summer and Hajj preparations in the GCC.
“[Demand] is stable, not flourishing. I cannot claim that it is flourishing. I had better expectations for demand [in May], but I can’t complain of a complete shutdown,” the producer said, adding, “I think the demand pick-up is coming slower than what I [had] anticipated.”
Recovered paper (RCP) prices in Saudi Arabia were stable in May, according to market participants.
Meanwhile, in the United Arab Emirates, both buyers and producers reported that domestic RCP prices increased during May. This was due to demand for local recovered paper from other countries, such as India.
Increase in international freight rates ends 5 months of continuous decline
In terms of international freight rates, Drewry’s World Container Index was on a rising trend throughout May. It increased by approximately 20% from May 1 to $2,508 per 40-foot container on Thursday May 29.
Behind the rise in the index are increased transpacific freight rates, driven by the 90-day pause on the China-US tariffs starting from mid-May, Simon Heaney, senior manager at Drewry, told Fastmarkets.
This has opened a window of opportunity for importers to get shipments and build inventories, he said. He added that this surge in demand comes at a time when carriers had reduced capacity in anticipation of diminished demand from previous tariff lines.
This upward trend contrasts with the consistent decline since early June last year, which appears to have halted in May.
But most contacts in the GCC region continued to report fairly stable shipment costs for their products.
As for inland shipments in Saudi Arabia, transportation is reportedly stabilized, with transport quotations reflecting increased fuel prices announced by the Saudi government at the beginning of the year.
RCCM offers from outside GCC described as uncompetitive
An RCCM producer said that the main competition in the GCC in May came from regional market participants. But some offers from East Asian suppliers were reportedly entering the Saudi market.
Meanwhile, in the UAE, Indian producers maintained their usual presence, along with offers from East Asian suppliers. European suppliers have had minimal presence in the GCC market, Fastmarkets heard.
All in all, most contacts said that offers from outside the GCC region were not particularly competitive.
Upcoming RCCM production capacity in GCC
Regional production capacity will be receiving a boost. Star Paper Mill, a tissue producer in the UAE, is in the final stage of construction of its new RCCM paper machine at its facility in Abu Dhabi, according to Aejaz Ahmed Munshi, the general manager of the mill.
The new PM will have the capacity to produce 134,000 tonnes per year, making testliner and fluting but also kraft paper and recycled paper for bags.
The mill is currently in its pre-operational phase, and trial production is expected to start by the fourth quarter of 2025.
Red Sea, a Chinese-owned company, has reportedly been installing a second PM at its facility in Yanbu, Saudi Arabia, according to a couple of Fastmarkets’ contacts. They estimated the mill’s production capacity to be around 600 tonnes per day or a bit less.
This would result in an annual capacity of slightly over 208,000 tonnes, making PM2 larger than the current machine, which has an annual capacity of just over 80,000 tonnes, according to Fastmarkets’ Asset Database.
The startup is speculated to begin in the third quarter, according to the contacts. Fastmarkets has not been able to confirm the startup or further details with the company.
UCIC completes IPO, announces expansion plans
In the corrugated industry, Saudi Arabia’s United Carton Industries Company (UCIC) has completed its initial public offering (IPO) and the listing of its shares on the main market of Saudi Exchange, according to a LinkedIn post on May 22. Following regulatory approvals and final allocations, UCIC’s shares were officially listed and commenced trading on Tuesday May 27.
UCIC’s prospectus revealed its plans to expand its production capacity. The company plans to introduce two new conversion machines during 2025-2026, increasing capacity by 35,000 tonnes per year. The group also plans to expand into the folding carton industry via strategic acquisitions or capacity enhancement within the same period.
UAE to slow down during summer; Saudi Arabia approaching date harvesting season
Looking ahead, buyers and producers in the UAE are discussing a slowdown, since the country will enter the summer, when schools are closed and many people leave the region.
“Since we have a large population of expats, we see roads being empty. A huge number of people go out of Dubai,” a market participant said.
Meanwhile, in Saudi Arabia, contacts are more optimistic and expect better demand, citing the approaching harvesting season for dates, which is reported to begin in June or July.
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