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In light of new price hikes announced by North American producers, prices for domestic containerboard paper remained unchanged for another month in Mexico, sources told Fastmarkets.
Market participants reported that demand has been well balanced with supply, while domestic old corrugated board (OCC) prices also held unchanged in February.
Fastmarkets’ monthly price survey detected that linerboard was trading at 14,000-15,000 pesos per tonne, up 23.4% in the annual comparison, while medium was stable compared with January at 13,000-14,000 pesos per tonne, 25.6% higher than a year ago.
Prices for kraft linerboard imports from the United States were also unchanged from January at $770-790 per tonne, 17.3% higher than in February 2021.
“We are all waiting to see what will happen with the increases settled for the USA,” a source said.
Another contact stated that because of the positive North American outlook for containerboard, there is no room for price drops in Mexico.
“We may see prices starting to move up here again by April,” that source added.
Another source also indicated that demand remained in line with supply after the last Covid-19 wave in January.
“Activities are returning more and more to normality after the Omicron wave and the annual price-adjustment period in January,” that source said, referring to price changes that several stores and service providers in Mexico make in January to account for inflation.
“In my view, and according to conversations I have with the market, there is no room for price cuts in the short term for Mexico,” a third source stated.
Sources agreed that, given the higher-price environment in the US and increased production costs, it will be hard for buyers to pay less for paper – at least considering the short-term forecast for the market.
“Only imported OCC dropped a little bit, not because of problems in demand but only due to better supply. The local raw material is unchanged, and other costs such as energy, salaries and chemicals are up across the board – not only in Mexico,” a contact said.
The latest data from Mexico’s National statistics agency (Inegi) shows that the country imported 873,374 tonnes of containerboard between January and November 2021, 31.5% higher than in the first 11 months of 2020. The United States was the main supplier during that period, shipping 813,964 tonnes.
Imports of recycled containerboard also improved by 15.5% in the annual comparison, to 315,405 tonnes.
In 2022, however, the country will probably supplement some portion of its imports with the entire capacity from Grupo Gondi’s new 400,000-tonne-per-year containerboard paper machine (PM), which started up in Monterrey a year ago.