Dive Brief:
- Smurfit Westrock is the latest packaging company to announce fiber product price increases taking effect Jan. 1, according to reports from Fastmarkets RISI and Truist Securities.
- This includes a $60 per ton increase for unbleached kraft and recycled linerboard, as well as an $80 per ton increase for corrugating medium.
- Additionally, the company announced a $70 per ton increase for white top linerboard in its West region and $50 per ton in the East.
Dive Insight:
This is at least the fourth major paper packaging company in recent weeks to announce planned January increases, marking a trend heading into the new year.
Packaging Corporation of America led the group with its Nov. 20 announcement of price increases for linerboard and medium. International Paper and Georgia-Pacific followed suit with their own increases for multiple categories.
It remains to be seen how customers will react and whether the increases will be recognized by Fastmarkets RISI’s index, which has become a somewhat contentious issue in the industry. Some analysts have also expressed skepticism about the sector’s latest pricing moves, given that the market is still recovering from a period of lower demand.
Smurfit Westrock’s latest quarterly securities filing notes the company has faced lower demand amid “challenging macroeconomic conditions, certain customer inventory rebalancing and shifting consumer spending” during 2023 and 2024.
Smurfit Westrock, like others, also recorded elevated operating costs from labor and raw materials.
The company’s filing notes an average three-to-six-month lag between when its raw material costs increase and when higher prices can be passed along to customers, and its latest results show earnings benefits from prior price increases this year. Smurfit Westrock recently reported that corrugated box pricing was up in Q3, versus the prior year period, but volumes were down 1.1%.
“We saw weaker demand in the South and Midwest region, stable volumes in the North Atlantic region and solid growth in Western states,” said CFO Ken Bowles during an Oct. 30 earnings call.
Smurfit, the second largest North American containerboard producer, is currently in a unique position relative to its peers as it works to integrate assets from the July acquisition of WestRock. This has included a focus on cost-cutting through layoffs and other moves, but also presents a potential opportunity as the newly combined business scales its strategy of “value over volume” to new regions.
