MARKET ANALYSIS
Strong start to the
year continues
Major sporting events in Europe and celebrations in the US calendar are
boosting demand for recovered fibre and this has been reflected in high-
er prices.
72
A U T H O R Robin Latchem
In the summer months, market forces
seem to change. Typically, the uptick in
demand for the supply chain for con-
tainerboard goes up in the spring as
manufacturers anticipate an influx of
orders from retailers. In the US, for
example, it is the build-up to several
back-to-back consumer demand peaks:
back-to-school shopping, Hallowe’en,
Thanksgiving and, of course, Christmas.
In Europe, the major football champion-
ships and the Paris Olympics are playing
a part.
Much of the containerboard for this
additional demand is produced in Q2.
With OCC and mixed paper represent-
ing the lion’s share of the feedstock
needed for the extra containerboard
and carton board, all eyes are on con-
sumer confidence and how box manu-
facturers source their domestic supplies.
It seems that things have been rather
bullish lately, following two consecutive
years of corrugated box decline. The
packaging analyst for Bank of America
recently wrote an article entitled:
‘Packaging prices are set to rebound,
ending America’s cardboard box reces-
sion…’
BREAKING POINT?
So what does this all have to do with
recovered fibre in the US after months
of lower supply and increased demand
for most grades over the past year? It
has resulted in a run-up of pricing where
OCC prices have more than doubled,
and mixed paper has more than tripled
over the past year. Eventually there is a
breaking point and, when prices get too
high, they will eventually fall. When pric-
es get too low, more tonnes are land-
filled, and prices will begin to rise again
due to lower supply at MRFs.
It appears prices for bulk grades have
reached their peak for both domestic, as
well as export markets. Price softening is
potentially underway. OCC prices drop
first because, at the beginning of this
cycle, higher quality grades such as DLK
tend to be the preferred feedstock and
those prices have not yet started to
drop.
PULP SUBSTITUTES
Rising pulp prices are forcing buyers to
re-examine pulp substitutes. These Major sporting events in Europe are boosting demand for recovered fibre. PHOTO Shutterstock
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