Containerboard prices edge up in the GCC countries in June

From price adjustments in the GCC to shifts in consumption patterns, learn what's driving the latest Middle Eastern containerboard price movements in June

Summer consumption solid in Saudi Arabia, softening in the UAE

There were slight increases in prices for locally produced testliner and fluting in the Gulf Cooperation Council (GCC) countries in June. Producers kept upward pressure on prices, referring to high costs of old corrugated containers (OCC) and logistics.

The prices reported to us this time typically increased by no more than $10 per tonne and several contacts said their prices had not changed. As a result, PIX Testliner GCC climbed by 3.18 dollars, or by 0.69%, up to 465.19 USD/t. PIX Fluting GCC headed higher by 3.83 dollars, or by 0.87%, and closed at 442.02 USD/t.

The latter part of June saw many corrugators take a few days of downtime during the Eid al-Adha holiday, but containerboard mills generally did not report any stoppages. Comments regarding demand were again mixed, in part depending on the country in question.

In Saudi Arabia, most sources reported healthy consumption, though some noted a bit of a slowdown around the holiday in June. Looking ahead, they expected demand levels to be boosted in July-September by higher beverage consumption, linked to the hot weather and the date harvesting season.

In the United Arab Emirates (UAE), several market observers witnessed a deceleration in June, and they expected this to be visible in July and part of August as well.

“Expats go to their home countries with their kids for school holidays during summer and the local population goes to Europe,” one source in the UAE summarized.

Costs of OCC, logistics still elevated

Containerboard producers noted that prices for OCC remain at a high level in the region and one also complained about availability, saying they were struggling to source sufficient volumes locally.

The UAE introduced an export fee on certain recovered paper grades earlier this year. It first led to a dip in OCC prices, but these quickly rebounded, and many market participants said the fee did not have the effect local containerboard mills had been hoping for.

Logistic costs within and between GCC countries remain elevated, according to several contacts. Overseas shipping rates have also been rising, particularly for west-bound material, containerboard producers in particular remarked. Drewry’s World Container Index has soared by 97% over two months to $5,318 per 40ft container at the end of June.

Contacts offered quite varied comments regarding containerboard imports from Europe and India, but a number of sources mentioned that Chinese containerboard has been offered in the GCC region of late.

New containerboard mill in Saudi Arabia

Regional capacity has recently received a boost. A Chinese-owned company usually referred to by the name Red Sea has reportedly started producing testliner and fluting at a new mill in Yanbu on the Saudi Arabian west coast.

A few sources confirmed seeing and multiple others hearing of test volumes sent to corrugators in Saudi Arabia. The contacts estimated the mill’s production capacity to be 6,000-7,000 tonnes per month. Fastmarkets has not been able to confirm the startup or the details with the firm.

Looking ahead, buyers and sellers are discussing new prices for July or the third quarter. Multiple contacts said producers were trying for another price hike, the result of which remains to be seen.

PIX indices covering the two main recycled fiber-based containerboard grades, produced in and delivered to the GCC, were launched in June 2023. The GCC countries include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

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