For the second consecutive month, containerboard manufacturers that announced price increases for 2025 have received news that mirrors what occurred in early 2024: A leading index showed a partial increase in February after no price movement in January.
Fastmarkets RISI’s Pulp & Paper Week publication on Friday included monthly pricing for February, showing a $40 per ton increase for containerboard and no change for boxboard, according to analysts. The index had shown no movement for either grade in January, despite most major producers announcing price increases to take effect that month, typically in the range of $60 to $70 per ton for linerboard and $80 to $90 per ton for medium.
After the January data came out, Truist Securities reiterated its forecast for the price increases to stick on a delayed schedule and show up later in the first quarter. Given the group’s previous projection for a $50 per ton increase in March, “this increase is a little earlier than we expected,” said Michael Roxland, senior paper and packaging analyst at Truist, via email.
The January and February index activity is similar to what occurred last year. After producers generally announced price increases of $70 to $75 for January 2024, Fastmarkets RISI’s index was flat that month and showed a partial increase of $40 per ton for recycled and kraft linerboard in February 2024. The lower-than-expected price recognition spurred producers to launch a second round of announced price increases during the summer.
The index’s repeated lack of or partial market recognition of fiber companies’ price increases last year sparked controversy that has carried over to this year. Executives expressed frustration during numerous recent earnings calls.
Earlier this month, Graphic Packaging International executives reported progress with putting in place their own newly developed index for price changes in customer contracts; they had announced in October that the company would move away from the third-party pricing indexes in the first quarter of 2025. In January, Packaging Corporation of America executives similarly expressed frustration with the Fastmarkets RISI index and said they’re moving away from it as quickly as possible.
Executives and industry observers alike frequently point out that the index only covers the open market, which is small and shrinking, so it has limited relevance to the overall market and pricing.
The open market “represents, by our calculations, maybe 5% of U.S. consumption,” said Ryan Fox, corrugated packaging market analyst at Bloomberg Intelligence. Most consumption occurs via customer contracts, and “a contract is not an open market transaction,” he said.
Bloomberg Intelligence is developing its own independent model for fiber pricing, which it believes “is a better indicator of the broader economy,” Fox said. Their model currently indicates economic softening for fiber.
In a Feb. 24 commentary, Moody’s Ratings predicted that economic growth for North American containerboard would continue this year, but it would occur at a slower pace. It projects that average containerboard prices in North America would rise about 9%, and volumes would increase 1% to 2%, over the next 12 months.
“Conditions are favorable for the price increases, given the lack of additional supply and ongoing industry consolidation,” the report said, and expectations are for the consumer packaging segment to continue benefiting from plastic substitution efforts. If implemented, tariffs would be inflationary and could cause a pullback in consumer spending, it added.
Moody’s also flagged a factor that other analysts have brought up recently: Containerboard capacity changes are on the horizon — and analysts expect more facility closures.
“There is a domestic oversupply of containerboard. There is a global oversupply of containerboard,” Bloomberg’s Fox said. “We’ve seen a weak marketplace,” with box shipments “up marginally from the year before.”
Moreover, box shipments are only “up 2.1% from where they were 30 years ago,” he said. “So really, the size of the pool hasn’t changed much in 30 years. The makeup of the pool has changed completely.”
He noted that in 1994, the largest market share for any one containerboard company was 11%. But consolidation has shifted companies’ current market shares. “You've got [International Paper], Smurfit Westrock and PCA making up almost 65% of the market right there. So the dynamics of the marketplace have completely changed,” Fox said.
Moody’s noted that two recent international megamergers — Smurfit Kappa and WestRock last July as well as International Paper and DS Smith in January — “show companies are seeking to integrate across regions and further consolidate the European market. Europe appears to be behind North America in terms of absorbing new capacity.” Ongoing consolidation and capacity reduction supports higher containerboard prices, it said.
After International Paper’s Feb. 13 announcement that it would close its Red River containerboard mill in Campti, Louisiana — along with three other facilites — Roxland issued a commentary noting Truist had expected this from IP as part of the company’s ongoing box plant system optimization plan. And it’s likely not the end of capacity reductions in 2025.
“We believe this announcement could precede further mill and box plant closures,” he said. “The ~2% containerboard supply reduction should be supportive of pricing.”
