Monday, February 13, 2017 11:15 am

BMO's Dr. Mark Wilde is reporting that reliable trade contacts report that KapStone has announced a $50/ton containerboard price hike on all grades -- linerboard and medium.

Wilde said BMO is not aware of announcements from other producers, but expect others to "follow," and that the news is not surprising.

"We had expected containerboard producers to announce a spring price hike," Wilde said in an email. "Key North American containerboard producers: IP, WRK, PKG, KS, and GEF." Following KapStone's hike, WestRock, the second largest containerboard producer in N.A., has announced a $50/ton containerboard price hike, effective with shipments March 13. WRK has also announced a 10% box and 12% sheet price hike effective with the same date.

The spring price hike announcement comes on the back of the $40/ton autumn 2016 hike.

Strengthening demand, lean inventories and high operating rates are all part of the equation, Wilde said. However, he added it appears the biggest issue is the spike in input costs (especially, OCC). OCC costs have increased sharply, chewing into company margins.

"Domestic OCC jumped $22/ton in February to $136/ton, and up 72% y/y. Recent reports suggest that the strength in OCC has continued into March. Last week's snowstorm in the northeast has further tightened the market."

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