Linerboard and corrugating medium prices down $15/ton
Analyst sees lower East Coast-Midwest sales prices in April
By Tom Stundza -- Purchasing, 3/25/2009 2:33:00 PM
Containerboard sales prices are in a steep decline that buyers expect will continue in April because abridged box consumption at home and abroad has reduced purchasing and boosted supply of linerboard and corrugating medium.
Buyers report that linerboard spot sales prices averaged $540/ton this month, down $15 from the month before, while corrugated medium also has dropped $15 to $530. Early orders for April deliveries put these prices at $500-$510 before customer-specific discounts, according to buyers and other market observers.
In fact, analyst George L. Staphos at Merrill Lynch & Co. says some April linerboard prices could be as low as $470-480/ton after volume discounts in the competitive Northeast region --and only slightly higher in the Midwest. He adds that corrugating medium transaction prices in the East Coast and Midwest may be heading for $440-$470 in coming weeks.
He writes to clients that “price declines have started to accelerate” largely because of the sharp reduction in boxmaking and the collapse in the export market. Also, the PPI Pulp & Paper Week newsletter says that some “producers appear to be more anxious to lock in domestic business for this spring and more aggressive in pricing even while they continue to take heavy downtime to try to balance supply with demand.”
“Supply management continues to be the focus of producers,” he says, noting that economists at RISI Inc. forest products information service have forecast as much as 1.8 million tons out of service this quarter. However, he adds, supply remains in excess because of the recent 40% plunge in U.S. linerboard export production, which has caused extra tonnage into the domestic marketplace.
Atop that, Staphos says the U.S. has started to attract more lower-priced offshore tonnage “with a small amount of spot European tonnage already making its way to the East Coast and Asia/Australia tonnage entering the West Coast”--where March prices dropped $15/ton to $585.
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