SAO PAULO, Sept. 3, 2013 (PPI Latin America) -With the yearend approaching, packaging paper and corrugated board suppliers expect seasonally higher demand in Brazil, especially in September, October and November. "The market had a slight improvement in August over July, especially for corrugated board. The prospects for September are high as we are going to enter the period of highest paper consumption in all segments. Let's wait and see if the perspective comes true," a supplier said.
"We have been receiving more orders than in July," a recycled paper producer stated.
A packaging producer mentioned that corrugated board shipments are likely to be 2% higher in August over July, but the volume is below expectations for a month like August which is typically one of the strongest months of the year. According to the latest data released by the Brazilian corrugated board assn (ABPO), the volume sold in July reached 282,413 tonnes, 3% higher than a year ago. In August of last year, the Brazilian corrugated board industry sold 301,264 tonnes.
As prices for fiber have been increasing in the past months in the country - especially recovered paper, but virgin pulp too because of the depreciated Real - paper and packaging producers are looking to adjust their products' prices in the domestic market in the coming months in a new attempt to improve their margins.
"The market is agitated. The recovered paper suppliers continue asking for higher prices, but no one can pass on 100% of those increases to the paper. Every Real 1/tonne in the recovered paper price becomes Real 2/tonne in the paper price because of taxes [recovered paper doesn't pay tax]," a source said. "Recovered paper prices are still going up and are likely to continue rising at least until November. Prices for recovered paper have been increasing every month and prices for paper have been rising every two months," another contact stated.
Most PPI Latin America sources expect both recycled and virgin based containerboard prices to increase in September - by 6-8% [or around Real 100/tonne] on fluting and by 3-5% [or around Real 60/tonne] on kraftliner. White top liner (WTL) prices are also likely to be adjusted, sources said. "Testliner prices may also increase if the price hike for kraftliner is really implemented," a contact commented. Another contact said that prices for kraftliner may be adjusted by up to 7% for clients which were paying very low prices.
Some sources mentioned that corrugated packaging suppliers will also seek a new price adjustment until the end of the year to pass on recovered paper and containerboard costs.
According to PPI Latin America, prices for kraftliner stood at Real 1,610-1,650/tonne in July-August, WTL at Real 1,870-1,950/tonne, testliner at Real 1,340-1,410/tonne and fluting at Real 1,170-1,230/tonne. All prices are higher than a year ago with fluting showing an increase of almost 20% year-over-year.
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With the Real currency depreciation, kraftliner producers find it more attractive to export and, as a consequence, the volume available in the domestic market declines, which may facilitate a price adjustment, sources say. The latest data available for packaging paper, released by the Brazilian pulp and paper assn (Bracelpa) show packaging paper exports in the first half rose to 300,000 tonnes, a 4.2% increase over the same period of last year.
In the case of sack kraft and paper bags, sources mentioned that prices are flat and demand is good, attending the expectations. "We expect a 3% increase in demand for industrial bags this year," a contact said. Another source commented that demand is showing some signs of improvement.
On the supply side, October promises to be the month of two new kraft paper machine startups. Klabin has recently announced that its new 80,000 tonnes/yr sack kraft machine at the Correia Pinto mill, in Santa Catarina state, is almost ready to begin operating. Iguaçu is also planning to put into action its new 80,000 tonnes/yr kraft paper machine as well as two multiwall sack converting lines at its Piraí do Sul mill in Paraná state.
By Renata Mercante, Editor, PPI Latin America,firstname.lastname@example.org