MWV Rigesa raises containerboard market share in Brazil to 20% with new PM; slates price hike

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MWV Rigesa raises containerboard market share in Brazil to 20% with new PM; slates price hike

July 08, 2014 - 04:53

SAO PAULO, July 8, 2014 (PPI Latin America) -MWV Rigesa, a subsidiary of MeadWestvaco group in Brazil, increased its containerboard market share in the country from 5% in 2013 to 20% this year, according to the company's business director, Jairo Lorenzatto. The executive explained that the boost reflects Rigesa's extra capacity traded in the market since it kicked off a new 300,000 tonnes/yr kraftliner paper machine (PM No. 4) in 2012 at the Três Barras mill, in Santa Catarina state, which led to technical gains and a new marketing strategy with the release of the HyPerform paper line.

Introduced to customers at the beginning of the year, the HyPerform line includes kraftliner and fluting papers marketed as premium due to weight uniformity, thickness and moisture profiles. "In July all our paper lines show a 5-10% improvement on their specifications. As the technical advances of our new PM is continuous, paper properties have been improving during its learning curve and after changes in the fiber mix," Lorenzatto stated.

To convince customers of the benefits, the executive explained that all products have been under tests recognized in traditional markets, such as the Short Span Compression Test (SCT) for kraftliner. According to Rigesa, SCT results with HyPerform are superior even when the company compared paper with a basis weight up to 14% lower than its competitors.

Due to that, Rigesa added in July a new 225 g/m² kraftliner to the line. "Clients were demanding this intermediary basis weight, aiming to substitute 260-280 g/m² papers," he said. With the addition, the HyPerform line has now six grades, varying from 100g/m² to 375 g/m², while fluting is available in four basis weights, from 100 g/m² to 170 g/m².

Market.With an installed capacity of 450,000 tonnes of kraftliner and fluting papers, Rigesa currently trades in the open market around 35% of its production. Of this total, 30% is exported, mainly to South America, including Argentina, Chile, Paraguay and Uruguay. "Some of these countries are extensive fruit and meat exporters which demand high quality packaging," Lorenzatto commented.

In Brazil, though, demand this year has been lower than expected, with the macroeconomic scenario uncertain. "Demand behavior is not clear at the moment, especially due to the World Cup. We need to see if the current feeble demand pace is only caused by this event or if the country's economy really slowed down," he said.

Due to the cost pressure registered this year, the company notified customers of a 6% price hike for all its kraftliner grades supplied in the country, effective July. The company's last kraftliner price increase took place in September 2013.

Food service.Besides containerboard sales, MWV Rigesa continues to invest in box conversion in Brazil. Last week, the company signed its first deal in the food service sector with Quiznos, in order to supply cup holders for the chain's 46 restaurants installed in the country.

"This is our first product focused in this segment and we are prepared and already in touch with potential clients to develop further tailor-made solutions, aligned with their growth strategies," said the company's VP for corrugated paper, Paulo Iserhard.

By Marina Faleiros, News Editor, PPI Latin America, mfaleiros@risi.com