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U.S. Corrugated Shipments Rise 1.3% in January U.S. box shipments rose 1.3% in January to 32.312 billion ft2, the highest level for the month in four years, the Fibre Box Association reported. The average week volume of 8.078 bsf, also up by 1.3%, was the best January performance since 2000.
The results were well in line with January’s industrial production index, which was unchanged in January after a gain of 0.7% in December, as reported by the Federal Reserve Board. Production of consumer goods fell 0.4% sequentially. The output of consumer nondurables edged down 0.1%, due to a drop in consumer energy products, but the production of nondurable goods, including paper, rose 0.5%.
Similarly, the Institute for Supply Management’s PMI registered 56.4% in January, a decrease of 0.9 percentage point from December. ISM’s New Orders Index declined 6.1 percentage points to 56.5% in January.
Except for the recovery of agricultural and produce shipments in the West and Southeast, however, the year-over-year corrugated gains in most regions of the nation were small. The Southeast’s volume was increased 3.3% from a year earlier and shipments rose 2.4% in the West.
Shipments in the largest South Central region were 0.8% higher. In other areas, January’s business was flat, with no increase in the Northeast, and just 0.2% and 0.4% higher, respectively, in the East Central and North Central states.
Richard Storat of Richard Storat & Associates noted that while “box demand strengthened in January, rising 5.6% from December, containerboard consumption at reporting U.S. box
plants grew even faster, posting a 9% gain over December’s usage.
Containerboard inventories in January rose just 8,500 tons at U.S. mills and box plants and calculated supply fell to the second lowest level since 1999.
The combined mill and box plant level of 2.695 million tons compared to 2.687 million tons at the end of December. Because of seasonal variations, calculated weeks of supply dropped from 4.6 weeks to just 4.2 weeks, second only to last year’s 4.1 weeks in the past five years. And except for January 2004, the combined inventory level was the lowest for the month since 1995.
January is seasonally the weakest of the year for the corrugated industry and overall inventories in the past 10 years have averaged higher by about 180,000 tons. With growing discipline among fewer integrated producers and independent boxmakers, however, over the last five years, the total was up an average of 138,000 tons.
The FBA report for January showed that containerboard inventories at the converting plant level remained well under control, rising 46,000 tons (2.0%) to 2.40 million tons. The December box plant total had reflected an uncharacteristic, drop of 8,300 tons to counter a 19,400-ton increase at U.S. mills.
In weeks of supply, the amount of rolling stock at box and sheet plants at the end of January equaled 3.8 weeks, compared to 4.0 weeks calculated for December. Containerboard consumption rose 1.7% year-to-year to 2.56 million tons and compared to the seasonally weaker 2.35 million tons consumed in December.
According to AF&PA data, mill linerboard and medium inventories overcame the large rise in December and dropped 37,500 tons--almost entirely linerboard--to a low 294,500 tons at the end of January.
As in December when mills cut back on the torrid operating pace of summer and fall, the January operating rate was 93.8% for U.S. containerboard mills.
For analysts, the January inventory report, combined with steady corrugated shipments volume for the month, signals success for a spring containerboard price hike and subsequent increase in corrugated prices.
Led by International Paper at mid-month, several producers are announcing a $50/ton price increase on all grades of containerboard, effective with March 15 shipments. The new 42 lb. benchmark reference price for unbleached kraft linerboard will be $525/ton, its highest level since the $530 mark reached in mid-1995 and $200/ton above the low seen at the start of 1999.
-- Gregg Fales, 3G Publishing
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