Containerboard Prices (CONT’D FROM PAGE 16)
$70-a-ton hike last month, they still secured $40-a-ton at a time when many signs pointed toward a price decrease. Containerboard’s price historically has risen more often than it has fallen, contrasting with commodities like corn or copper. Corn remains below $5 a bushel despite pressure from rampant inflation, equipment prices and maintenance fees. Prices are affected by volatile weather, unpredict- able harvests, international competition and fluctuating demand. Box sellers will know they’ve found the new market price when buyers stop buying and start to pivot toward plastic containers, mailer bags and other alternatives. Sell- ers will try to maintain that price as long as possible – until they can raise it again. Major box producers, needing to cover the costs of recent capital investments, don’t appear willing to lower prices even when market fundamentals appear to warrant it. Yet linking box prices to the cost of a commodity like containerboard appears to miss a major point: The over- capacity for boxes still far exceeds that for containerboard. This will leave box plants with open machine time that they may want to fill. The best way to attract new business – and keep the old – is to reduce prices. Containerboard increases might not be denting box demand partly because they aren’t yet filtering through to end customers. Several box plants told us their average selling prices were lower in 2024 than in 2023, even after the nominal $80-a-ton boost in contain- erboard. Pricing Outlook Over the next quarter, if box demand remains chal- lenged and there’s no seasonal pickup (typically 2-3 per- cent), prices in the open market for both containerboard and sheets could fall. Non-contract box buyers may have accepted the bump at first, but they’ll likely follow up with an intense round of quotes and bids. Some business could change hands, a trend that be- gan in the second half of 2024. Margins may narrow, and larger integrated producers could flex their pricing power in a bid to capture market share. Independent box makers should be able to find con- tainerboard at lower prices, given a 30- million-ton global oversupply, keeping them competitive. When Packaging Corp. of America or International Paper raise prices for the material, that has little bearing on the lion’s share of open-market transactions, since neither company sells much there. The industry’s push for higher box prices and increased margins will heighten the focus on other metrics. The big- gest challenge will likely be maintaining and training the labor force to improve on-time delivery, quality and ser- vice. Despite the intensifying competition, sources said large producers may already be considering another price hike
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www.boardconvertingnews.com
April 28, 2025
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