Corrugated Demand is Low

Corrugated box shipments at midyear remain almost 2% lower than a year ago and, even though they appear to have improved by 0.9% in June over May, they still aren’t strong enough yet to provide any traction for the proposed $40/ton price increase on 42-lb linerboard in the East and a $50/ton increase in the West. Statistics show that U.S. containerboard production was flat in June at 2.919 million tons. But, containerboard inventories dropped below 2.4 million tons, according to Fiber Box Association and American Forest and Paper Association .

Box plant inventories reached their lowest level since June 2006 (equal to 3.2 weeks of supply) and that “may be enough to give some teeth to producers' price hike,” writes analyst Claudia Shank of J.P. Morgan Securities in New York. However, other analysts say that that box demand needs to demonstrate positive momentum before a linerboard price hike can gain traction, and demand in June wasn’t robust enough.