The two largest North American producers of uncoated recycled paperboard, Greif and Sonoco, are lining up additional price increases starting in July. The action might signal upcoming price changes for at least one other fiber grade, too.
Greif announced on June 4 that it would raise prices by $50 to $70 per short ton for new orders and shipments of all grades of URB. The company said the change would take effect July 8 and results from higher raw material, energy, labor and transportation costs, in addition to increasing demand for URB.
Sonoco announced on June 10 that prices for all grades of its URB would increase by $70 per ton in the United States and Canada, effective July 10. It said the hike is to offset higher input costs.
Sonoco’s Monday notice could be positive for Greif because it reinforces the move and “should allow for greater price implementation,” Michael Roxland, senior paper and packaging analyst at Truist Securities, said in a June 10 message to investors. He noted that the two companies are the largest North American URB producers, together comprising about half of the market share.
In addition to higher resource and operating costs, the increase may be partly driven by a lack of full price increases being reflected in the market, Roxland said. Most major fiber producers, including Greif and Sonoco, started the year with announced price bumps on multiple grades that would take effect in January or February. But Fastmarkets RISI’s monthly price indexes did not show any increases reflected in the market in January, and in February it showed an increase by only a little over half of what producers had announced.
The lack of full acceptance prompted International Paper to raise linerboard prices again, starting June 1. A torrent of similar announcements followed from competitors including Cascades, Georgia-Pacific, Pratt Industries and WestRock.
Roxland predicted that these new price hikes won’t be the last. Greif and Sonoco’s URB pricing boosts could foreshadow another bump for coated recycled board, in light of that grade’s increase also not achieving full recognition earlier in the year.
“Continued inflationary pressures could also spur producers to increase prices on certain grades of virgin boxboard,” such as as coated unbleached kraft, Roxland said. “Additionally, recall that in the last round of announcements, URB was the first grade to receive an increase, followed by CRB and CUK.”
