Dive Brief:
- The first, second and fourth largest North American uncoated recycled paperboard producers — Sonoco, Greif and Cascades — announced $60 per ton price increases this week set to take effect in early July, according to company news releases and Fastmarkets RISI.
- In addition, Greif is implementing an increase of at least 6.5% on all tube and core and protective packaging products as of July 13, and Sonoco will increase prices on those and all converted paperboard products by 7% as of July 8.
- This is the second round of URB price increases that major producers have announced so far this year. Ox Industries, the third largest North American URB producer, also joined the initial wave in March.
Dive Insight:
Producers previously attributed the March price increase announcements to input cost inflation and are echoing that reasoning for the new wave of hikes. This time though, they’re citing an additional reason: strengthening URB demand.
“This necessary increase is driven by several factors, including robust demand across our markets and strong utilization in our paper mill network,” said Taylor Lane, Sonoco’s vice president and general manager for industrial paper packaging for North America, in a statement.
While Sonoco had reported softer URB volumes in the first quarter, CEO Howard Coker confirmed on the company’s April earnings call that Q2 was picking up. He reiterated that the company is introducing new URB products and entering new markets. Replacing saturated kraft with URB is a particular area of opportunity.
During Greif’s April earnings call, CEO Ole Rosgaard said demand in the tube and core segment was soft but improving in the North American paper and film industries, its two largest end markets.
He also noted that the company announced the March URB price increases to partially offset cost inflation, and expected Greif to start feeling positive effects in July. Rosgaard said Fastmarkets RISI recognized the first announced increase in April.
Similarly, Coker had described during Sonoco’s April call how the Iran war and other conditions caused rapid cost inflation for inputs such as energy, freight and petrochemicals beginning in March. He estimated this could result in $8 million to $10 million in extra costs during the second quarter.
“We must recover this inflation and have implemented a number of necessary price increases, including a $70-per-ton uncoated recycled paperboard increase in the U.S. and an 80-euro per ton increase in Europe,” he said at the time.
