With the same number of shipping days as a year ago, average week shipments of 6.843 bsf also dropped 9.4%, according to the Fibre Box Assn. For seven months, shipments were off 10.5% at 201.113 bsf and fell 9.3% at an average 6.8 weeks after adjustment for two extra shipping days last year.

July’s shipments were 2.4% below June’s, disappointing those who had hoped for some improvement after July’s strengthening in the Institute of Supply Management’s PMI index. However, double-digit decreases in FBA’s East and South Central regions and the Southeast doomed that expectation. U.S. box shipments have been falling for the past year, more or less in line with weakening industrial production of non-durable goods.

Overall industry linerboard and medium inventories rose seasonally by 79,500 tons to 2.32 million tons, or 4.2 weeks of supply, with most of the gain (78,400 tons) occurring at box plants.

According to the American Forest & Paper Assn, U.S. containerboard mills produced 2.80 million tons in July, 29,000 (1.0%) more tons than in June. At the mill level, supplies on hand rose just 1,100 tons, AF&PA said.

Mark Wilde, forest products analyst for Deutsche Bank Securities, in an emailed comment to clients called the July box data “a disappointment” given June’s showing and the improving ISM figures.

Wilde is skeptical about talk of a potential price hike initiative in the fall. “With demand still soft and most input costs tame, we think it would be a victory for containerboard producers if prices remained flat for the remainder of the year,” he said.

However, some market watchers, including independent analyst Dick Storat of Richard Storat & Associates, think that "signs are increasingly encouraging that this year’s fourth quarter shipments could outpace last year’s."

The Institute of Supply Management’s New Orders and Production Indexes rose significantly above 50% in July, "thus setting an expectation for future growth in the sector," it said.

"The difference between New Orders and Inventory indices, a good proxy for future production strength, stayed again in July at its highest level since 2004," Storat said in his newsletter Scoring Boxes. After ISM's New Orders expanded at the fastest rate since the middle of 2007 and inventory reductions are still strong, he said, "These are all good signs for 4th quarter strength in box demand."

Richard Skidmore at Goldman Sachs agreed.