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On Wednesday, Truist Financial (NYSE:TFC) Corporation provided insights into the recent trends in containerboard pricing within Italy and Spain. The analysis followed RISI’s weekly PPI Europe publication, which reported on paper pricing in these countries. In Spain, unbleached kraftliner prices increased by €15 per metric ton (MT) in May, marking a consistent rise over the last two months, despite a €15/MT decline at the beginning of the year. Spanish testliner prices remained unchanged from April but had previously seen a significant hike of €60/MT.According to InvestingPro data, WestRock (NYSE:WRK) Company, a key player in this market, maintains a strong market position with $19.9 billion in revenue and a market capitalization of $25.2 billion. The company’s impressive 55-year track record of consistent dividend payments, currently yielding 3.81%, demonstrates its financial stability in this cyclical industry.
Italian markets also experienced an uptick, with unbleached kraftliner prices climbing €10/MT in May, adding to a €15/MT increase in April. This rise comes after a notable decrease of €37.50/MT between October 2024 and January 2025. Italian testliner prices saw a €7.50/MT rise in May, continuing an upward trajectory from a €45/MT rise noted between January and April, following a €40/MT drop during the prior three-month period.
The increase in kraftliner pricing aligns with the €60/MT price augmentation for brown and white kraftliner in Europe, initiated by SCA effective May 1. Currently, unbleached kraftliner pricing stands €45/MT above May 2024 levels in Spain and €32.50/MT higher in Italy. Testliner pricing also shows an increase, with Spanish prices €80/MT higher and Italian prices up by €27.50/MT compared to the same time last year. These increments partly reflect the €60/MT recycled containerboard price increase targeted by producers like Saica, effective April 1.
Truist views the higher Spanish and Italian unbleached kraftliner pricing as a positive development for companies such as WestRock Company and International Paper. The firm also suggests that the price increases could lead to similar trends in other European regions, including Germany and France, which did not witness kraftliner price hikes in May.
The ongoing rise in containerboard prices is attributed to several factors, including elevated costs, such as those for old corrugated containers (OCC). This is happening despite the introduction of approximately 1.4 million MT of net new nameplate recycled containerboard capacity since April 1, with an additional 1.03 million MT expected to come online in 2026.InvestingPro analysis shows WestRock currently trades at an attractive valuation relative to its growth potential, with a PEG ratio of 0.55. Subscribers can access 8 additional ProTips and a comprehensive Fair Value analysis in the Pro Research Report, along with detailed insights into the company’s financial health, which currently rates as FAIR based on multiple factors including profitability and cash flow metrics.
In other recent news, Domtar (NYSE:UFS) is considering converting its Gatineau, QC newsprint mill to containerboard production due to declining demand for graphic paper. This strategic move is part of a broader plan to repurpose its assets, following the successful conversion of its Kingsport, TN mill to containerboard production. Meanwhile, Georgia-Pacific announced the permanent closure of its Cedar Springs, GA mill by August 1, 2025, reducing the industry’s containerboard capacity by about 1 million tons. Analysts from Jefferies and Citi view this closure as a positive development for the industry, potentially stabilizing supply and demand dynamics and supporting pricing.
The closures by Georgia-Pacific, along with those by International Paper, Greif (NYSE:GEF), and WestRock, collectively reduce North American containerboard capacity significantly. Analysts at Bank of America note that these closures are unfolding faster than expected, reflecting a dip in demand in 2025. Truist analysts suggest that the reduction in capacity could improve pricing power for remaining producers, aligning supply with current demand levels. The market is expected to maintain containerboard prices, with large producers likely to implement a box price increase tied to recent containerboard price realizations. As the industry adjusts, stakeholders will be closely monitoring how these developments impact the broader paper and packaging sector.
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