Paper mills announce linerboard pricing twice a year, typically from February through March and September through October. We post all updates to linerboard pricing on our Corrugated Price Tracker.
We expect linerboard pricing to increase by $50/ton at the end of March, and this will increase the price of corrugated boxes by end of April 2018. At a glance, here are the predominant factors that are driving the pricing increase:
- Most major paper producers have announced a $50/ton increase to a majority of grades, including the benchmark 42# kraft linerboard grade which is rising from $705-$755/ton, effective on all paper shipments starting March 1st.
- Generally, increases in box pricing follow suit within a month of linerboard increases.
- Rising freight costs is a primary drivers.
- Mill capacity and moderately increasing demand are also key drivers.
- Export prices of paper could also play a role, as well as continued consolidation on both mill and converting sides.
Reasons cited by mills for this particular increase include freight costs, moderate demand growth, and mill capacity. Domestic freight costs are at an all time high and the highest they’ve been since 2015, according to data from the U.S. Bureau of Labor Statistics. Demand continues to moderately increase a few percentage points per year, driven largely by the ecommerce sector. Current mill capacity utilization is at 93%-98%, so any growth is strains demand. (For reference, full capacity is typically considered to be around 85%, since 100% volume renders a factory inoperable.)
These are the predominant factors for the increase, but there are certainly other factors at work here as well. Notable, significant acquisitions on both the mill and converting side over the past year, and export paper pricing is at a high point.
Check the Lumi Corrugate Price Tracker for continued pricing updates.
