Containerboard - Could We See a US Price Increase in 2016?
|Date:||February 16, 2016|
|Authors:||Chip Dillon, James Armstrong|
|Vertical:||Packaging and Forest Products
|Company:||DS Smith Plc (SMDS)
WestRock Co. (WRK)
Packaging Corp of America (PKG)
International Paper Co (IP)
Smurfit Kappa Group (SKG ID)
We understand that the benchmark 42-lb. kraft linerboard price published monthly by trade publisher RISI is essentially the only significant variable used in major US box contracts. We see RISI’s $15 per ton (-2.4%) reduction in this price to $615/ton in January, which RISI suggested was a 3-year “catch up” move, to be an isolated change given the current industry structure (both vertically and horizontally) – especially with less than 10% of boxes made by truly “independent” box plants. We also continue to model in no change until April-May 2017, when we see what would be the first price increase in four years occurring.