SAO PAULO, Sept. 24, 2013 (PPI Latin America) -US and Mexican containerboard suppliers were finally able to implement some price adjustments in Mexico this month after several attempts since the end of the first half. "We estimate that the price adjustment for both liner and medium totaled up to around Peso 300/tonne (around $25/tonne) by now and the difference [Peso 200/tonne] is ongoing," a major Mexican paper producer stated. Other two major suppliers agreed that the prices increased by around Peso 300/tonne and expect to implement a further adjustment through November. "The national paper was adjusted by only Peso 200-250/tonne, or $15-20/tonne, because the market conditions didn't favor further increases as the Mexican economy is slower. But the US paper has increased $50/tonne since July," another supplier stated.
PPI Latin Americashows prices for domestic recycled linerboard and corrugating medium higher in September over August with liner now being negotiated at Peso 7,800-8,200/tonne ($605-640/tonne) and medium at Peso $7,400-7,800/tonne ($575-605/tonne). The prices are respectively 6% and 5.6% higher than September 2012.
As for imported kraftliner, PPI Latin America brings prices now to the $645-665/tonne range at the Laredo border, almost 15% higher than a year ago.
PPI Latin America sources pictured a mixed scenario for imported paper price moves in Mexico. Some suppliers stated that they were able to implement the full planned $50/tonne increase, but others said the hike was only partially implemented and added that they have limited volumes to offer in the Mexican market. Meanwhile, some buyers said they didn't get any price increase for imported or domestic containerboard. "The paper price adjustment is now expected only for 2014," a contact said.
"In my case I haven't yet agreed with any price adjustment with my Mexican suppliers, but they say that some of their customers got a partial increase. As for imported paper, prices are unchanged after the $25/tonne adjustment [implemented in June]," a source said. Another contact stated that both domestic and imported paper prices are flat. A box producer commented that some national containerboard suppliers increased prices, but others didn't. "As for US suppliers, almost everyone adjusted prices in Mexico aiming to be closer to $700/tonne," the contact said.
Following containerboard price moves, corrugated board producers are also seeking higher prices in Mexico, but sources said the results have been limited. "The corrugated box market is a little bit complicated. Even though September, October and November are usually good months, we have not been receiving as much orders we were expecting. Many suppliers announced price adjustments, but customers are resisting accepting it," a source said. Another contact stated that box suppliers expect to finish the aimed 8% price increase implementation in October. "The price adjustment has been successfully implemented with many clients, with big buyers receiving lower adjustments, but overall the prices are rising by 5-8%," another contact stated.
Demand and supply.The perspective for a Mexican GDP increase in 2013 has been reduced and the country has been experiencing currency exchange rate variations, which don't benefit much paper and packaging consumption, source state. "Containerboard demand continues sufficient and demand is not heated. The Mexican economy became weaker from the second quarter on and the government revised its GDP projection from 3.5% to 1.8% in 2013," a contact explained. "The ups and downs in the exchange rate have been happening since August, affecting the Mexican economy as a whole compared to the first half performance," another contact commented.
But Mexican containerboard suppliers are confident that demand will improve from September on. "It has been stable, but this month it is increasing significantly," a seller said. "The market is flat and slow, but I think demand is going to increase in October, which is the best period of the year," another supplier stated. "Our perspective for the next two months is of higher volumes as companies start to prepare for the yearend sales and also in the fourth quarter the agricultural season begins, which benefits box demand. We don't know whether the rain will delay the berries harvest a little bit due to the high moisture," a third supplier commented.
As for containerboard imports from the USA, the GTIS numbers show that Mexico bought lower volumes this year than in 2012. In January-July, the country imported 488,637 tonnes of containerboard from the USA, 4.4% lower than in the same period of 2012. The most significant volume was kraftliner, which declined 2.2% to 349,493 tonnes. Meanwhile, semichemical medium dropped 7.8% to 72,668 tonnes, recycled medium by 14.3% to 36,043 tonnes and recycled linerboard by 7.6% to 30,433 tonnes.
By Renata Mercante, Editor, PPI Latin America,firstname.lastname@example.org