Containerboard Market Tightens Further in September as In-Transit Inventories Fall Again
(USA, Oct. 17, 2017) The US containerboard market is tightening with declining inventories at mills and box plants bolstered by a strong box business, says Vertical Research Partners’ packaging and forest products analyst Chip Dillon.
Dillon offered the following insight into the tightening containerboard sector:
Box Shipments Increase by 4.0% Per Day on Challenging Comp
This morning, AF&PA and the Fibre Box Association (FBA) released their September 2017 US box shipments and box plant/containerboard mill data. Box shipments (measured in billion square feet) decreased by 1.0% year-on-year on an actual basis. However, there was one less shipping day this September (20) versus September 2016 (21). Adjusting for this differential, “average week” or per-day shipments increased a solid 4.0%. When there is a difference in shipping days in comparable months, we see the average of the actual and per-day (average week) shipments change as a solid reflection of the strength of the box business (as some box customers receive the same number of boxes per month regardless of the number of shipping days). The average of these 2 figures from September was 1.5%, a respectable figure in light of the heavier-than-normal hurricane and flooding activity this September as well as the challenging comparable (as September 2016 box shipments grew by 2.5% on both an actual and average-week basis). Year-to-date (through 9 months) shipments are up 2.3% on an actual basis and 3.4% on a per-day basis, which is well ahead of 2016’s total shipment growth of 2.1%. (There have been 189 shipping days so far in 2017 versus 191 days at the same point in 2016.)
Containerboard consumption by box converting plants was 2.607 million tons, down 0.6% from September 2016 (but up about 4.4% per day) – indicating that board consumption in tons grew faster than converted products in square feet.
Inventories Fall More than Normal
We also learned that containerboard inventories at mills and box plants declined by 13,700 tons in September from their August level, to 2.379 million tons. The decline compares with the 10-year average month-on-month increase for the month of September of (a mere) 700 tons. This greater-than-normal “draw” was the result of hurricane-induced downtime which was arguably more than offset by the impact of an implied reduction of in-transit inventories (30,000 tons) and the double-digit decline in exports. Inventories were lower by 0.5% from September 2016, bringing the streak of year-on-year inventory declines to 16 months. Weeks of supply declined 0.2 weeks from August, falling to 3.6 weeks in September. This was the second-lowest weeks-of-supply level for the month of September in 10 years (with 2012 being lower at 3.5 weeks).
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