Market sources reported that prices moved up by 700 pesos per tonne, less than the 800-1,400 pesos-per-tonne price hike that suppliers had announced.

Recycled linerboard is trading at 14,700-15,700 pesos per tonne, 16.9% higher than in April 2021. Medium is trading at 13,700-14,700 pesos per tonne, 18.3% higher year on year.

Supplier- and buyer-side sources reported that they may negotiate the implementation of the remaining portion of the price increases in May.

Negotiations started after prices moved up in the United States and amid higher production costs for producers in Mexico. Sources mentioned gas, chemicals and labor costs as the most relevant elements.

“Undoubtedly, the inflationary context that affects raw materials has been reflected in this price adjustment,” a supplier said.

Market participants shared mixed views about demand for corrugated packaging. A few contacts believed demand was holding despite increased uncertainty, but others said mills are already seeing a slowdown in orders. Many feared that economic deceleration could trim containerboard consumption in the following months.

“Sales in March and April were good - not great, but positive,” a boxmaker said. “Forecasting what will happen in May, however, is almost impossible.”

Sources showed concern with the impacts of the war in Ukraine, even though imports from countries in the European Union and Russia represent a small share of Mexico’s containerboard trade.

Contacts said that corrugators were demanding more paper from local producers in order to substitute for imports. According to those contacts, the Covid-19 pandemic had already increased the cost of freight from Europe, and the war in Ukraine is an additional concern due to the rise in energy costs for producers in Europe.

Data from Mexico’s National Institute of Statistics and Geography (Inegi) shows that recycled containerboard imports from the European Union and Russia totaled roughly 21,700 tonnes in 2021, a 6% share of the total.

“I have been a client of a producer with mills in Russia for more than a decade, and they are not providing anymore,” a buyer said.

Said a supplier source: “Impacts so far are not huge, but it certainly adds a lot of uncertainty."

Imported US kraft linerboard increased by $30 per tonne this month, according to the PPI Pulp & Paper Week pricing survey.

The price increase in the US export market follows a $60-per-ton increase in March in North America. The kraft linerboard export price increase is being phased in during April and May.

Mexico imported 72.661 tonnes of kraftliner in January 2022, a 6.5% increase versus the same month of 2021, according to Inegi. The United States was the main supplier, shipping 70,777 tonnes - a 4.9% annual increase.

From Fastmarkets RISI