Prices for containerboard keep stable in March; corrugated box suppliers start hike implementation

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Prices for containerboard keep stable in March; corrugated box suppliers start hike implementation

March 18, 2014 - 06:04

SAO PAULO, March 18, 2014 (PPI Latin America) -Prices for both virgin based and recycled containerboard remained unchanged in March in Brazil.PPI Latin Americasources commented about rumors of price adjustments planned by paper suppliers from March-April, but so far nothing has been put into practice yet.

"There was no price adjustment in March; all grades are maintaining the same prices as February. There is intention to increase levels, but nothing has happened yet. Prices for recovered paper didn't increase further, but as corrugated board producers are raising their prices, recovered paper suppliers will want to adjust their prices too and thus there will be room for paper producers to push their prices up," a source commented.

According toPPI Latin America's survey, kraftliner is being sold for Real 1,665-1,715/tonne, flat with February and January, but 4.3% higher than March 2013. White top liner also remains at Real 1,890-1,950/tonne and is 1.9% higher than a year ago. Testliner is also stable this year at Real 1,400-1,460/tonne and 8.3% more expensive than in March 2013.

Fluting - including virgin based and recycled paper - is unchanged at Real 1,280-1,345/tonne, 22.1% higher than a year ago.

"Our kraftliner prices are stable this month as well as our recycled paper, which didn't see any changes considering that recovered paper prices are flat too. We'll keep observing the market [demand] to see if there will be room for price adjustments, though," a source said. Another contact mentioned that kraftliner prices declined "a little bit" in the domestic market due to high supply - even though the currency is favorable for exports, prices are low in Europe and Asia, and the risk is high in Argentina. "With the recovery in export prices, we believe in a price improvement for kraftliner in May both in the domestic and the external markets."

In January, according to data from the Brazilian pulp and paper assn (Bracelpa), packaging paper production increased 2% over the same month of 2013 to 460,000 tonnes, pushed by exports which climbed 3.5% to 59,000 tonnes. Meanwhile, domestic sales declined 1.3% to 154,000 tonnes and imports fell 20% to 4,000 tonnes. As a result, Brazilian packaging paper consumption increased 1.5% to 405,000 tonnes.

In March, sources reported domestic sales volumes similar to January and February and a little higher in some cases. "So far we haven't noticed any additional demand from our clients," a paper producer stated. Another contact said paper demand is better in March than in February, but still lower than expectations. A trader stated that his "sales are stronger this month, maybe because buyers are rebuilding inventories or maybe because they want to get rid of the possible higher prices targeted by suppliers".

Another supplier commented that his kraftliner sales are slow in the domestic market, but are likely to improve as the Carnival has already passed. "As for fluting, our sales keep good, especially in the case of high performance paper, even though we know that regular fluting sales are not doing so well in Brazil and supply is expected to increase in the coming months with the start up of new capacities - Fernandez and Irani in June, Klabin at the end of the year and Bragagnolo at the beginning of 2015. This may push paper prices down, even though recovered paper prices will remain high due to higher demand," the source explained.

Fernandez is to start up a new 108,000 tonnes/yr fluting machine at its Amparo mill, in São Paulo state, southeast Brazil. The company already has three paper machines at that plant with a total capacity of 160,000 tonnes/yr of containerboard. It also makes corrugated packaging and, according to sources, will consume part of the new machine's capacity to increase its box output.

Paper and box producer Irani will also have around 36,000 tonnes/yr of additional recycled containerboard on its machine #1 at the Vargem Bonita mill, in Santa Catarina state, southern Brazil. The startup is planned for July 2014 after a 30-day stoppage in May-June to implement the modernization.

The largest packaging paper and box producer in the country, Klabin is investing to install a new 110,000 tonnes/yr recycled paper machine at Goiana, Pernambuco state, northeast Brazil, which is expected to start up in October. Another 60,000 tonnes/yr of kraftliner and fluting will be available this year at Klabin's Piracicaba and Angatuba mills, both located in São Paulo state.

As for corrugated board, statistics from the Brazilian corrugated board assn (ABPO) show that volumes increased 1.6% to 277,751 tonnes in January 2014 over January 2013 and 5.1% to 262,852 tonnes in February of this year over the same month of last year. Corrugated board shipments in January-February 2014 at 540,602 tonnes are 3.3% higher than a year ago.

PPI Latin Americasources believe that March sales should be high as buyers may anticipate purchases for prices before the 10-12% adjustment being aimed at by suppliers, such as Klabin, Irani and Orsa IP. "We have already started to implement the new prices on corrugated board and expect to complete it by the end of April with an average adjustment of 8%," a supplier stated.

By Renata Mercante, Editor, PPI Latin America,rmercante@risi.com