Prices for recycled fiber-based containerboard in the Gulf Cooperation Council (GCC) had some increases with few decreases in February and as a result Fastmarkets’ PIX indices for locally-produced testliner and fluting rose slightly on Tuesday March 4.
While most of the prices reported to Fastmarkets were unchanged, some increases in Saudi Arabia and the United Arab Emirates (UAE) pushed the indices up by a few dollars. This is the first time the indices have risen since November 2024 data.
Fastmarkets’ PIX Testliner GCC index rose by $3.61 per tonne, or 0.76%, to close at $477.53 per tonne and the PIX Fluting GCC index increased by $2.37 per tonne, or 0.53%, to $453.75 per tonne on March 4.
Demand seen going up in Saudi Arabia
Sources in Saudi Arabia said containerboard demand was mostly healthy in February compared with January, due to preparations for Ramadan.
“Our deliveries will be higher on a per day basis and probably in aggregate even though we have three days less than in January. So [demand is] definitely better [in February],” one source said.
In the UAE, sources said the demand was okay or normal though there was a lack of enthusiasm and positivity, with majority saying they had hoped for better business for February. However, despite not seeing the pressure that usually comes from the customers prior to Ramadan, one source from the UAE reported a modest uptick in their orders in February.
Recovered paper prices were said to be more-or-less stable month on month during February, according to sources from the UAE and Saudi Arabia.
Transportation prices continue to rise in February
In terms of international freight rates, one source reported hearing declines in February, which was backed by Drewry’s World Container Index, which continued to retreat by approximately 22% from January 30 to $2,629 per 40-foot container on February 27. Drewry’s World Container index has been declining since January 9.
“I even sense [the decline in freight rates] with shipping lines approaching us looking for business. Usually when the market is tight, they don’t do that,” one producer told Fastmarkets.
For inland shipments in Saudi Arabia, transportation companies are reportedly trying to ask for higher prices, citing increased fuel prices.
“We are fighting [against the increased transporting prices] so they are fighting [back] as well. Let us see who wins,” a GCC source said.
Highest PMI in a decade recorded in Saudi Arabia in January
Discussing the competition in the GCC region, a source noted that while Indian producers continue to ship to the UAE, only a few offers have been heard of. Similarly, European mills have had minimal presence in the local market.
The limited offers from both India and Europe have not been considered competitive. Another source emphasized that competition in the GCC largely comes from regional players.
Purchasing Managers’ Indices (PMIs) in the non-oil private sector increased only in Saudi Arabia in January. For Saudi Arabia, the PMI was recorded at 60.5 in January up from 58.4 in December. The PMI for Saudi Arabia has been at its highest in a decade, since September 2014, according to the Riyad Bank.
The UAE experienced the smallest decline in its PMI, going from 55.4 in December to 55.0 in January. Meanwhile, Kuwait and Qatar showed slightly bigger drops in PMIs during January. Kuwait fell from 54.1 in December to 53.4 in January. Similarly, Qatar’s PMI declined from 52.9 in December to 50.2 in January after being somewhat stable since October 2024.
Most GCC contacts expect a slowdown toward the end of March as the region enters the final weeks of Ramadan, followed by Eid al-Fitr celebrations, which brings reduced working hours and festival holidays. However, in Saudi Arabia sources anticipate demand to pick up after Eid al-Fitr, as the peak summer season comes closer.
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