Falling raw material costs drive down paper prices
by: Artem Segen
Most packaging paper product prices in the US and EU remained stable month-on-month (m-o-m) in October. However, EU test liner prices decreased by 2.7% m-o-m to €730/mt, and the US Cartonboard GD price decreased by 1% m-o-m to $1135/mt. Demand in the market remains weak.
Prices for raw materials for paper production decreased m-o-m, only prices for pulp in the EU increased slightly. Prices for northern bleached softwood kraft (NBSK) pulp delivered to European ports rose by 2% m-o-m to €1,414/mt in October, the first increase in three months. However, NBSK pulp in the US declined by another 2% m-o-m and remains on a downward trend. Waste paper prices in the EU collapsed by 17% m-o-m. Waste paper prices in the US started to decline for the first time in 9 months, down 1% m-o-m in October.
The demand trend showed weak growth and in the first three quarters of 2024, the production of paper and paper products in the EU managed to increase by 3.2% y-o-y. In the US, paper production grew by 1.4% y-o-y over the same period. Thus, the growth in paper production formed the growth in demand for raw materials for paper production in the first three quarters of the year, which was reflected in higher raw material prices. However, seasonal demand growth for paper in Q4 is lower than expected, so the overproduction of paper that was noted earlier led to market overstocking. Thus, raw material suppliers also faced overproduction, as they expected the dynamic demand growth to continue.
In December 2024, market sources in the US and EU do not expect significant price reductions as demand is likely to stabilize. Although prices for waste paper continue to decline in the first half of November, and likely through lower production costs will likely put downward pressure on the prices of paper products where recycled paper is used as the main raw material for production.
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