:2024-06-21 Source:Resource-recycling Category: Industry
Multiple paper packaging giants have announced price increases for their uncoated recycled paperboard in recent weeks due to rising recycled fiber prices and demand.
Ohio-headquartered Greif on June 4 announced it will implement a price increase of $50 to $70 per short ton on all of its uncoated recycled paperboard, which is made from OCC and mixed paper. The following week, Greif announced the products it makes from uncoated recycled paperboard will also increase in price by at least 6%.
In a statement, Greif said the price hike “is in response to increased raw material, energy, labor, and transportation, as well as increasing demand for our uncoated recycled board products.” The price increases take effect in July.
The price increases are only applicable to buyers who don’t have purchase agreements tied to price indexes such as RISI’s Pulp and Paper Week. Greif and others have expressed frustration with RISI in recent months, opining that the index’s reported prices do not match real-world market dynamics.
“The continued delayed recognition of announced pricing increases combined with the rising OCC cost has led to a significant margin compression of over 10% despite flat sales,” said Larry Hilsheimer, Greif’s chief financial officer and executive vice president, during the company’s June 6 quarterly earnings call.
He added that “the outsized impact of the index-driven price-cost dynamic, which we still view to not be in sync with real market trends, is a headwind we have and will continue to aggressively work to offset.”
OCC prices have more than doubled over the past year, increasing from a national average of $48 per ton in June 2023 to the current $108 per ton in June 2024, according to RecyclingMarkets.net.
Greif is not alone in taking issue with index pricing reports. During an earnings call earlier this year, Graphic Packaging CEO Michael Doss described pricing indexes as “historically inaccurate and very nontransparent,” and said Graphic aims to move away from using index pricing in the future.
Greif is also not alone in seeking to increase prices: South Carolina-based Sonoco on June 10 announced a $70 increase per short ton for all grades of uncoated recycled paperboard. “This price action is necessary to offset increased input costs,” the company said in a statement. This week, it announced a subsequent price increase of 6% on the products it makes from recycled paperboard.
