Uncoated recycled boxboard prices decline in North America for the first time in nearly three years

URB prices decline by $20/ton in NA, its first fall in almost three years; Graphic upsizes Bristol, UK, facility

Most prices were unchanged across grades in the boxboard market this month in North America – except uncoated recycled boxboard (URB) 20-pt bending chip paperboard, which was down by $20/ton, according to Fastmarkets’ PPI Pulp & Paper Week price survey. Industry leaders overall expect demand to naturally pick back up starting next month and through April.

About 50% of producers and buyers reported lower pricing for URB in January, according to the survey. January’s $20/ton decline put the 20-pt URB bending chip price at $1,070-1,090/ton in the open market. This is the first decrease for the URB in North America in about three years. Sellers and buyers noted the drop in price appeared to begin in the fourth quarter.

“URB in the last two months opened up significantly,” a contact told Fastmarkets. “It’s a great time (for URB).”

Some producers moved away from URB when the pandemic hit because it wasn’t available, the contact said. Sellers of the grade had to readjust, but it is becoming available again and some customers may go back to using URB, the contact said.

Further price updates

Prices remained unchanged on the open market in North America for solid bleached sulfate (SBS) grades tracked by Fastmarkets. The 16-pt SBS folding carton C1S paperboard held at $1,510-1,550/ton and 14-pt SBS cupstock PE2S remained at $1,830-1,870/ton, according to buyers and sellers. Supply and demand was said to be balanced for the grades.

Although SBS folding carton prices held this month, one contact said that folding boxboard (FBB) from Europe could end up competing against domestic SBS and affect market price levels. This topic has been especially talked about in the last six months in North America, as several European and US producers announced projects or that they were considering projects for FBB and SBS.

“SBS – domestic we are seeing lead times softening,” an end-user packaging company contact said. “FBB is putting a lot of pressure on domestic board. … We will be importing board vs buying SBS where we can.”

The January price for 20-pt coated unbleached kraft (CUK) folding carton C1S paperboard was also unchanged. There is a continuing “solid” supply and demand condition for CUK this month, buyers and sellers told Fastmarkets. The price for that grade in January was at $1,470-1,510/ton.

The price for coated recycled folding boxboard (CRB) 20-pt clay coated news paperboard remained the same this month at $1,260-1,280/ton, according to buyers and sellers.

Lead times across-the-board were reported to be softening in January for all the main grades of boxboard, contacts told Fastmarkets.

“Our lead time on CRB is comparatively short these days,” a contact said. “Three weeks, four weeks if we are in a bind. That seems to be consistent right now and not nearly as problematic as it had been some months ago. It’s less stressful. There was a lot of allocations about a year ago.”

There is still good demand for food/beverage items in the US, converters said, referring to reports from their customers.

“People need to buy food and may end up changing their buying habits a little if cost becomes an issue,” a contact added.

Another contact told Fastmarkets that some CRB producers are being “relatively” aggressive in trying to pick up new business.

“It’s relatively easy for them to do that because they are a lower-price alternative (to virgin SBS paperboard) so when you are in an inflationary environment, everyone is looking for ways to save money,” the industry contact said. “The availability of product is no longer a concern and that is a big change. Everything kind of flows with that.”

Although the price for CRB was unchanged this month, there have been some reports of lower spot discounts by smaller players in the industry. That was first heard several months ago during the survey.

There is still some allocation across boxboard grades. Still, there is now more flexibility for buyers to secure their supply of boxboard compared with a year earlier when demand was outstripping supply.

Backlogs down somewhat

Backlogs for CRB, SBS folding carton, and CUK were reported this week at mostly six to seven weeks and as far out as 10 weeks, producers and converters said. At mid-year, the backlogs for these grades were about 10-12 weeks in the US.

There is now more availability of boxboard and some allocation in the market but not much, an industry contact said. Demand for boxboard and cartons in fourth quarter 2022 was less than it was on average in the previous three quarters from January through September 2022, the contact added.

“Even though we are not officially in a recession, everyone is acting like we are or planning to be in one. That emotional component is a pretty heavy-duty driver,” a producer contact told Fastmarkets. “I have not seen any deterioration of pricing but I’m not certain that it won’t happen. Our forecast is, if (pricing) does (decline in the US), it will be in the second quarter not the first.”

A contact told Fastmarkets that boxboard markets in South America are slowing down and although the US, Mexico, and Canada markets have remained firm supply/demand-wise, the industry should keep an eye on supply a few months into 2023. Markets have slowed there because of high inflation and political instability that have affected consumption.

“Things are not isolated like they used to be,” the contact noted. “An event in South America doesn’t only impact South America. This could be a global trend. Europe is roughly strong, but there are some headwinds there around energy and their economy. If you have some dramatic decreases in volumes in certain sectors, it creates voids in schedules. That often triggers instability.”

Additional capacity for beverage packaging manufacturer Graphic Packaging

Graphic Packaging will move its Bristol, UK, beverage packaging manufacturing operations to a new facility nearby with additional capacity and will create about 30 new jobs, the company announced this week. The new factory will be 255,000 ft ², about twice as large as the previous location. Graphic Packaging is moving to a larger facility because of increase demand.

The new site will be operational in the fourth quarter of this year, and it will be one of the largest and technologically advanced sheet-fed folding carton plants in Europe, the company said. “When the move to the new site is complete, the increased capacity and capability will enable us to offer more sustainable packaging innovations for our customers,” UK sales director Glyn Champion said.

Supremex said it acquired the shares of Impression Paragraph, a provider of paper-based packaging, print, and point-of-sale products for commercial markets.

Impression Paragraph operates two facilities: one in Ville-Saint-Laurent and another in Saint-Hyacinthe, QC. It mostly makes folding carton packaging and point-of-sale displays for the cosmetic, pharmaceutical, food and confectionary, and retail sectors, the companies said. The transaction was worth about $26.6 million on a cash and debt-free basis.

Oliver Inc. said it acquired Ohio-based Tap Packaging + Design, a manufacturer of custom folding cartons for customers in food and beverage, beauty products, confection, health and wellness, and consumer goods markets. “Their diverse range of capabilities will allow us to expand our product offerings and enhance our overall service for our customers,” president and CEO Dan Rodenbush said in a release.

This article was first published in PPI Pulp & Paper Week, the industry’s most trusted pulp and paper market news and prices for North America. Speak to our team to find out more and subscribe to our newsletters.

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