Update on Containerboard

notes from report from Deutsche bank
PPW pre-released its monthly estimate of containerboard prices, suggesting that prices would fall not more than $10-15/ton. This would put the price of benchmark 42-lb linerboard East grade down about $75/ton over the last 7 months. However, reports suggest a price variance of around $50-60/ton between virgin grade and recycled grade producers. Box shipments in April fell 10.9% y/y on a blended basis, in-line with the YTD blended decline of 10.8% y/y. Despite weak Apr shipments, inventories declined 115K tons m/m, against an average decline of 23,000 tons m/m, over the last 10 years. However, we think permanent supply moves by International Paper and Smurfit could alter the tone of the market. By our estimates, the NA market may have just over 4MM tons of capacity overhang.