Bleached board hike uneven in October as folding carton markets see weaker demand, cupstock up

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Bleached board hike uneven in October as folding carton markets see weaker demand, cupstock up

October 17, 2014 - 11:39

OAKLAND, CA, Oct. 17, 2014 (PPI Pulp & Paper Week) -With softening demand across all carton grades, US boxboard markets treaded water in October and a price increase on solid bleached sulfate (SBS) folding carton was not registering, buyer contacts said this week. But long lead times and resin cost pressures for food service grades supported a partial price increase on cupstock, with $20/ton implemented.

Supplier contacts acknowledged the weaker carton demand, notably in frozen food, but said at least part of the $50 increase effective since Sept. 1 was in place on some folding contracts. Yet buyers were adamant the hike was not being pushed hard amid shorter SBS backlogs and seasonally slowing orders.

"There's no re-engagement," a large SBS folding buyer commented about his suppliers. "It's flat, flat, flat."

"They are bullish on getting it through," said a cupstock and folding buyer. "But it's nowhere near $50. And it's not on folding."

SBS folding is being impacted by weak food and retail carton demand that is also undermining unbleached kraft and coated recycled markets. Buyers of multiple substrates added that weak fourth quarter boxboard and carton conditions would lead to serious re-negotiating on long-term contract prices in coming weeks and months.

"They are not as bold as they were," said a carton converter source about his suppliers. "They are looking for commitments."

SBS unmade orders have declined steadily, down 14% over seven consecutive weeks to Oct. 8, and 23% lower than a year ago, according to the American Forest & Paper Association figures. But at 483,000 tons, a producer called backlogs strong for this time of year. Some of that are polycoated food service grades experiencing a backup for extrusion of up to 10 weeks exacerbated by the ongoing conversion to paper cups from foam.

Suppliers said demand was solid across the range of food service grades: cup, plate, dish, and tray.

"It's not tight as a drum but good for this time of year," a producer contact said. "Plate is quite strong and it's not picnic season."

Another contact noted that there were only a few SBS machines dedicated solely to food service, further adding to delays.

But one frustrated folding carton buyer said cup and plate was not enough to prop up the entire SBS market.

"If you have real cost issues vs softness in the market, then limit the price hike to extruded board," the contact said.