Improved demand for packaging and high recycling costs of paper push up prices on the Russian market
With the continuation of the Russian-Ukrainian war and Western economic sanctions, according to data, the price of recycled containerboard (RCCM) in Russia rose in September, while the price of kraft paper remained unchanged, and kraft paper producers announced price increases in October. Despite Western sanctions and Russian citizens' concerns about the future, domestic packaging demand in Russia improved slightly in August and September compared to the first two months of the summer. This demand, along with expensive waste paper, provided support for price levels for all containerboard grades.
In September, the manufacturer of recycled containerboard, which was on the verge of losing money last month, announced an average price increase of 11,000 rubles/ton. As the price of bleached kraft paper and semi-chemical corrugated paper is between 38,100-42,650 rubles/ton, the price gap between recycled containerboard and the original grade has become very small. White-faced kraft paper prices remained stable at around 74,000 rubles/ton.
It looks like the market has recovered slightly. Traditionally, demand for corrugated packaging increases once the vegetable season begins, followed by grain harvesting and winter holiday shopping. In addition, import substitution policies are also affecting consumer activity and containerboard demand. Locally produced goods require packaging, which drives demand even in a downturn.
Pressure from high waste paper costs has been pushing up the price of recycled containerboard, with prices in Russia rising from 8,000 rubles/ton to over 14,000 rubles/ton in September, averaging around 11,000 rubles/ton. Meanwhile, old corrugated boxes (OCC) are trading at around 18,000 rubles/ton, the same as in the last week of August. However, at supermarket chain auctions, prices sometimes reach 20,000 rubles/ton.
While high waste paper prices remain one of the main reasons for the rise in recycled containerboard prices, insufficient inventory is also said to be a factor in the rebound in demand and price increases of more than 35%. Packaging manufacturers have very little supply of paper on hand. Although prices have fallen, no one is willing to buy extra quantities, hoping to buy them cheaper later. Their inventories are now low, which also helps demand. The situation in early September was quite difficult as producers struggled to source enough containerboard. As things stand, it may be that this situation will continue for a long time.
