Domestic containerboard prices remain stable in Mexico; economy cools down before elections
Despite a $30 per tonne price increase for containerboard exports from the US to Mexico this year, the domestic market for the product still has not shown any reaction in terms of demand and prices, sources told Fastmarkets during a visit to the country in the week beginning on May 13. The overall sentiment is […]
The post Domestic containerboard prices remain stable in Mexico; economy cools down before elections appeared first on Fastmarkets.
Despite a $30 per tonne price increase for containerboard exports from the US to Mexico this year, the domestic market for the product still has not shown any reaction in terms of demand and prices, sources told Fastmarkets during a visit to the country in the week beginning on May 13.
The overall sentiment is that the pace of purchases in the country has been sluggish since the end of 2023, and no new factors appeared this year to sustain a solid recovery. Several sources mentioned that despite the positive outlook for investments in the country due to the nearshoring trend, effectively little has happened.
Another key factor that has been putting investments on hold is the presidential election that will be held on June 2. Like other parts of the world, Mexico is polarized between two candidates with very different political views.
“Everyone is waiting to see what will happen before investing now. If the candidate supported by the current president wins, we already know the rules of the game. If it is the opposition, we may see some changes. The economy is on standby,” a source said.
A second source stated that there is no particular reason for Mexico not to show gross domestic product (GDP) growth this year due to its proximity with the US, while industrial and agricultural demand is coming back.
“Indeed, the year started slow, but we should begin to note improvements in the second half, as containerboard inventories in the chain are at balanced levels now,” they noted.
A third source added that cost increases with old corrugated containers (OCC) are also pressuring the market, but there is no room to talk with customers about price increases at the moment.
“I actually see mills still taking downtime, while other local producers invested to modernize their paper machines and produce more, so there is more supply than demand. On the other hand, energy, labor and costs with imported OCC are higher; there is no way to think about more price cuts, but also no negotiations for increases,” the third source added.
Fastmarkets’ price survey found domestic testliner once again traded for 12,100-12,500 pesos ($729-754) per tonne, down 7.5% year on year, while medium was at 11,100-11,500 pesos per tonne, 9.6% lower than a year ago.
Kraftliner exports from the US also held at $620-650 per tonne, and are down 5.9% compared with May 2023.
In volume, containerboard imports from US in January-April improved by 24.7% year on year, to 244,192 tonnes. The country is the largest market for US containerboard exports and is benefiting form the stronger peso exchange.
“We note that another reason for domestic prices to remain unchanged until now is that imports from the US continue to arrive at a competitive cost, as our currency is strong, making imports attractive,” a fourth source said.
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The post Domestic containerboard prices remain stable in Mexico; economy cools down before elections appeared first on Fastmarkets.