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SKG: recovered fibre cost inflation ‘unprecedented’

Global – Revenues at Smurfit Kappa Group (SKG) climbed 5% in the first six months of this year on the back of ‘strong demand in most markets’, but it faced ‘unprecedented recovered fibre cost inflation of approximately Euro 75 million year on year’, according to ceo Tony Smurfit. These fibre cost pressures present ‘short-term challenges’, he adds.

Kraftliner demand has been ‘robust’, says the group, with a Euro 50 per tonne price increase implemented in the third quarter. Smurfit comments: ‘In the first half, global containerboard supply has been very tight, and remains so. In Europe, we have seen a strong demand environment in the second quarter leading to a first-half increase in absolute corrugated volumes of over 2.5% with growth of 5% for the second quarter on a days-adjusted basis. In the Americas, the group reported strong volume growth in Colombia, Mexico and Brazil while Argentina and Venezuela remained challenging.’

As a result of the containerboard price increases in the first half of 2017, the second quarter saw SKG begin increasing corrugated prices in Europe and the Americas. ‘These increases will be progressively implemented throughout the remainder of the year and into the first quarter of 2018. However, shortage of supply and unabated input cost pressures in both regions have necessitated further containerboard price increase announcements for implementation in the third quarter. This will require a further round of corrugated price increases in the fourth quarter and beyond.’

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