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Gulf Cooperation Council (GCC) region prices for recycled fiber-based containerboard (RCCM) were mostly stable to up in July, according to data reported for Fastmarkets’ PIX indices published on Tuesday August 5. The indices for locally produced brown testliner and fluting experienced only minor changes, with both grades inching up slightly in July.
Fastmarkets’ PIX Testliner GCC index gained only $0.49 per tonne (0.10%) to close at $475.69 per tonne and the PIX Fluting GCC index inched up by $0.67 per tonne (0.15%) to $452.50 per tonne.
Market participants in Saudi Arabia described containerboard demand as stable to slightly up month on month during July, citing the seasonal upturn during the summer season. Additionally, in Saudi Arabia, schools are reportedly opening again in mid-August which has prompted preparation and has had an increasing effect on demand locally.
“Most of our staff were on vacation and are now coming back. Also, schools are opening very soon and maybe all this is why [food and beverage companies] are getting themselves ready for the next months,” a buyer explained to Fastmarkets.
But sources in the United Arab Emirates (UAE) said demand was down month on month with a majority citing the summer holidays as the reason behind the lagging demand.
“Since early June, after Eid holidays, the market has dropped [in the UAE and in the region] and you can see a lot of expats going to their home country during summer vacation. Locals are also planning trips to outside UAE and are out July-August,” a UAE-based contact told Fastmarkets. “You can see the traffic on the roads is much less busy compared to previous months,” he added.
Recovered paper (RCP) prices continued to be stable in Saudi Arabia during July, according to the market participants. But one corrugator, selling leftover containerboard back to containerboard mills as RCP, stated that they had increased their RCP prices.
“We told our paper mills that you increased your prices, so we have to increase our RCP prices also,” he said.
In the UAE, both producers and buyers also reported seeing stable RCP prices in July.
“The prices are the same like last month, $5-10 [movements] here and there. Doesn’t make any great impact. It depends on how hard you negotiate. It is a matter of negotiation, nothing is happening,” a second UAE-based contact said.
In Saudi Arabia, Al Jawdah Paper has ramped up an RCCM machine at its facility in Al Mithnab, Al Qassim province. The new PM will have the capacity to produce around 72,000 tonnes per year, making testliner and corrugating medium, according to the chief operating officer, Rajasekar Veerichetty.
The company started PM1’s foundational work and machine installation back in 2023 and has now started commercial production in late June. The cost of this project is to be approximately $40 million.
Discussing the containerboard supply in the GCC region in July, all contacts spoken to by Fastmarkets noted that the main competition continues to come from the regional participants. But in Saudi Arabia and the UAE, European suppliers were notably more active in July compared to June.
“During June some materials were arriving from Far East mills, mainly from Malaysia. Due to the tariffs, panic was created so Far East mills who had excess capacity and were supplying to China had supplied to the [GCC] region instead [during June],” a Saudi buyer explained as the reason for the fewer offers seen from Far East mills in July.
“So, no competition from Far East mills in July, but we have seen Europeans a lot. We have been approached by traders for European paper suppliers, and we see that Europeans are hungry for business. They are getting competitive. That will be another challenge for local mills, I assume,” he added.
Meanwhile, in the UAE, Indian mills maintain their usual presence along with offers also from Far East mills.
But offers from Far East mills were not considered as competitive.
International freight rates have been falling since early June, according to Drewry’s World Container Index. This was preceded by a price surge starting in May, triggered by higher US tariffs announced in April.
The market reaction to the tariffs was delayed by a month, with freight rates beginning to rise in May and surging through the first week of June, according to Drewry. The index lost approximately 29% from the most recent peak in June 12 to $2,499 per 40-foot container on July 31.
But most contacts in the GCC region continued to report fairly stable shipment costs for their products.
“We were expecting some disturbances, but [the Iran-Israel conflict] did not materialise so there are no significant changes on the seaside,” a buyer in the region commented.
As for inland shipments in Saudi Arabia, transportation costs continue to be stable, however one market participant commented that during July the difficulties in availability of trucks from early June has since eased.
“We had some challenges in June to have the right trucks due to the Hajj-pilgrimage season and also due to regulations in accepting the trucks to come into the cities, so in terms of availability the situation is much, much better compared to June,” a GCC contact told Fastmarkets. “In terms of pricing and costs, no change, similar to June pricing rates,” he added.
Looking ahead, buyers and producers in the UAE are not anticipating any major changes in containerboard demand during the summer period.
Meanwhile, in Saudi Arabia, contacts are looking forward to the date harvesting season and the reopening of schools in mid-August, which are expected to further boost the demand.
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