SAO PAULO, Jan. 21, 2014 (PPI Latin America) -Prices for US linerboard export to Mexico had a $10/tonne decrease in December-January, according to PPI Latin America sources, due to excess supply in the yearend, especially in North America, Europe and Brazil, and mills trying to push out more export during their normal seasonal slowdown. "Also, there was more paper available in the USA due to some newsprint machines which have been converted into containerboard machines," a source stated. In addition, the new containerboard capacities from Norampac and Atlantic in the USA is just starting to hit the open market, as most of their new tonnage has been gone mainly to their own box plants.
The prices for US kraftliner at the Laredo border are now at $635-655/tonne from $645-665/tonne in November after the price increase implemented in the third quarter of last year. The current price is 4% higher than January 2012. Some market sources mentioned US kraftliner prices declining by up to $20/tonne in January to a range of $625-630/tonne in the Mexican market.
A contact in Mexico commented that "The price decline issue on imported paper should be more related to some brokers who wanted to keep orders, but not from US mills targeting to reduce their prices." Another PPI Latin America contact mentioned that "The low seasonal demand in the yearend in Mexico, as well as the Peso depreciation against the dollar, may have pushed imported paper prices down."
Data from the US government indicate a 4.3% increase in the country's linerboard exports in November 2013 to 307,000 tonnes. Statistics from the GTIS - the Global Trade Information Service - show an annual 19.7% decrease in US linerboard exports to Mexico in November at 51.265 tonnes and a 4.5% drop in January-November to 589,142 tonnes. Total Mexican containerboard imports from the USA in the period reached 765,340 tonnes or 4.1% lower than January-November 2012.
As for domestic prices, levels are unchanged over November-December, with recycled linerboard at Peso 7,800-8,200/tonne ($590-620/tonne), or 1.9% higher than January 2012, and corrugating medium at Peso 7,400-7,800/tonne ($560-590/tonne), or 1.3% higher than a year ago. "Prices for domestic containerboard have been flat in Mexico after the $30/tonne increase implemented in the fourth quarter of last year following the $50/tonne hike announced in September by US suppliers," a contact stated. "We expect to raise kraftliner prices further this year to compensate the price hike on the US paper which has not been fully implemented on the domestic paper," another contact said.
Containerboard demand, according to sources, was a little bit lower in December due to paper machine downtime during the holidays and seasonally lower orders from buyers. "Some paper mills advanced their production in order not to be without inventories, but anyway in Mexico there is enough paper supply to meet demand, so we didn't see any issues related to supply or prices," a contact commented.
Another source mentioned that "Usually, the yearend is slow for containerboard, and 2013 was not different." "But we expect to have a higher market improvement in 2014, especially before the second half, however with some weak months ahead," the contact added. People in general are optimistic about 2014 for containerboard in Mexico and stated that demand closed 2013 at a good level.
"The perspective for Mexico has improved after the Central Bank released a GDP growth projection increase of 3.5% for the country this year. Internally, people also talk about a similar growth rate, so I believe containerboard prices tend to be stable with pressure to increase this year pushed by the economic improvement. The corrugated box sector will follow that trend too. Also, as Asia has started to buy Mexican recovered paper again, that material's prices should be pressured to rise as well," a contact said.
Another source added that demand for corrugated boxes was a little bit higher in the end of 2013 pushed by Christmas as well as by the beginning of the fruit season.
By Renata Mercante, Editor, PPI Latin America,email@example.com