June packaging focus: RCCM, UKL prices continue to climb, but FBB and WLC are flat

DS Smith announced a Euro 60/tonne price increase for European customers, with stable RCCM production costs and rising old corrugated container prices, while UKL prices surged across Europe except in the UK, hinting at potential hikes and market fluctuations

In June, recycled containerboard (RCCM) prices rose for the second time this year in most markets, besides the UK, where higher levels are expected in July. With the two increases, prices in France, Germany and Spain are typically reported Euro 100/tonne higher than they were in March, before the hikes started. Prices also came up in Italy this month, but effective total hikes since March are reportedly significantly less there so far, mostly in the Euro 50-70/tonne range.

On June 18, DS Smith announced a fresh Euro 60/tonne hike for European customers, effective immediately, but so far contacts have not reported other producers seeking similar hikes. Demand is reported to be better than in the same period of 2023, but not remarkably good. While contacts reported old corrugated container prices rose a little this month, RCCM production costs are perceived as stabilizing.

UKL prices are up, future hikes expected

Unbleached kraftliner (UKL) prices also rose this month in most European markets, bar the UK, where hikes were still in discussion. In France and Germany, the gap between RCCM and UKL has been maintained, with both seeing a total hike of Euro 100/tonne since March. In southern Europe, however, increases are lagging. Prices in Italy for European UKL are typically reported as Euro 60-65/tonne higher since March, although many contacts expect further increases in July.

In Spain, most contacts report total European UKL hikes at Euro 80/tonne so far. American virgin containerboard is widely used in both countries. Contacts report little change in their relationships with American suppliers ahead of the near-term merger of WestRock with the Smurfit Kappa Group and the prospect of an International Paper/DSS merger.

FBB prices are flat, increases likely in July

Folding boxboard (FBB) producers continued to lament high input costs as the market negotiated pricing for Q3, with some degree of upward movement expected for July, when the previously announced price hikes of some Euro 80/tonne or 8-10% are set to take effect.

At current pricing levels, producers said that even when their machines are full, their companies are not making enough money for future investments and that something is “unsustainable” and “wrong” with the picture. Converters reported firm negotiation tactics from producers, with one converter musing that while maybe the producers do need the increase, maybe they are also just “riding the momentum” of pulp price increases, which have brought pulp prices to historically high levels.

WLC prices are flat with PfR rising

White-lined chipboard (WLC) prices remained mostly unchanged in June even as producers contended with rising paper for recycling (PfR) prices. While one producer communicated to their customers that they would be seeking a price increase of some Euro 30/tonne and at least one converter announced that they had accepted an increase effective July 1, most producers seemed to be biding their time hoping that market conditions would be somewhat more amenable later in the year so that they could pass a price increase with less friction than those already pushed through earlier this year.

Demand was reportedly not very good, and both buyers and sellers said that they did not expect any dramatic changes in the coming months and would be satisfied with some gradual improvement rather than a drastic change.

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