Big shock in the paper industry! The four major paper giants jointly raised prices

Against the backdrop of global economic fluctuations and supply chain challenges, the four major paper giants - International Paper, GP Georgia-Pacific, Smith & Westrock and American Packaging - recently announced that they will increase the prices of various paper products from January 1 next year. This decision not only affects the pricing mechanism of the paper market, but may also have a chain reaction on downstream industries and consumers.

Price adjustments of the four major paper giants

International Paper announced that it will increase the price of white-faced kraft paper by $70 per ton and the price of corrugated paper by $90 per ton.

Georgia-Pacific said that in the eastern region, the price of kraft paper and white-faced kraft paper will increase by $60 per ton, and the price of recycled paper and corrugated paper will increase by $90 per ton. In the western region, the price of kraft paper will increase by $80 per ton, the price of recycled paperboard and white-faced kraft paper will also increase by $90 per ton, and the price of corrugated paper will remain at $90 per ton.

Murphy & Westlock announced that the price increase involves multiple paper types, including unbleached kraft paper and recycled containerboard by $60 per ton, and corrugated paper by $80 per ton. The company also announced that its white-faced kraft paper in the western region will increase by $70 per ton, and the eastern region will increase by $50 per ton.

Prior to this, American Packaging Company took the lead and planned to increase prices on January 1st - kraft paper increased by $70 per ton, and corrugated paper increased by $90 per ton, which means that the top four containerboard manufacturers in the United States have announced price increases.

Impact and analysis on the paper market

Fox emphasized that the $70/ton and $90/ton increases announced by American Packaging Company this time are equivalent to an 11.5% price increase. At the same time, its competitors such as International Paper have reduced production by 500,000 tons due to economic reasons. Fox said: "If American packaging companies really have full demand, then price increases may be understandable. But the problem is that competitors such as International Paper and Smith & Wilkins are not producing at full capacity. From the overall market perspective, there is still oversupply, and carton prices should be on a downward trend."

Smurphy & Wilkins pointed out in its latest quarterly report that the company faces a severe operating environment in 2023 and 2024. Factors such as poor macroeconomic conditions, inventory adjustments by some customers, and changes in consumer spending have led to a decline in demand for the company's products. At the same time, rising labor costs and raw material prices have further increased the company's operating pressure.

It is worth noting that there is usually a lag of 3 to 6 months between the increase in raw material costs and the increase in final product prices. This means that the company's current profitability reflects to some extent the effectiveness of the countermeasures taken previously.

A recent survey by Bank of America Securities shows that although the carton industry has begun to recover, it has not yet fully recovered, and some companies are still facing oversupply. Ryan Fox, a corrugated packaging market analyst at Bloomberg Intelligence, pointed out last week that carton prices have shown a downward trend due to oversupply.

Many of these companies have announced multiple price increases in 2024. While some have successfully implemented price increases, not all have been implemented smoothly. For example, Cascades' third price increase announcement in September was not fully reflected in Fastmarkets RISI's October data. Rocksland explained that such price increases require the joint support of large integrated companies in the industry to be successful.