Cheaper Cardboard Boxes On The Way As Containerboard Prices Drop
In a world of falling raw-material prices, add one more: the humble cardboard box.
Containerboard, the corrugated raw material used as packaging by everyone from FedEx Corp. to Office Depot Inc., is getting cheaper. That sent manufacturers’ shares prices tumbling on Monday, with International Paper Co., the world’s largest paper producer, sliding the most in six years.
Industry publication Pulp & Paper Week estimated containerboard prices will fall as much as $20 a ton from December levels, said Mark Wilde, an analyst at BMO Capital Markets in New York. The price of kraft linerboard -- a type of cardboard used in containerboard -- declined in January for the first time since 2009, Bloomberg Intelligence analysts Joshua Zaret and Matthew Hagerty said Monday in a report, citing industry information provider RISI Inc.
The containerboard decline is likely to feed through to cheaper cardboard-box prices, according to Deutsche Bank AG.
The linerboard price drop is a surprise given commentary on stronger-than-expected December box shipments, analysts at Citigroup Inc. said in a note. Still, supplies have been increasing, and the competitiveness of exports to Latin America have suffered from the strength of the U.S. dollar, BMO’s Wilde said.
“We’ll continue to see pressure on containerboard pricing because demand has been fairly static," Wilde said Monday in a telephone interview. “It will have an impact on earnings with these companies."
News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.