1Q2010 - Containerboard

As year ended 2008 is approaching, there are few significant events that has happened over the last one to two weeks. Businesses in the South East Asian region remained mix. Business in Vietnam is reasonably strong as many box plants are running at full steam to cope with rising demand in preparation for the Lunar New Year in mid Feb 2010.

As for wastepaper (AOCC), we experienced a significant jump in its prices mainly contributed by higher freight cost. However, many believed that the underlying issue is due to low availability. Recovery rate remained high but generation of wastepaper dropped drastically due low consumer spending in all major countries like US, Europe and Japan.

As for paper mills utilization rate, many experienced an increased in utilization rate indicating that strong orders were received. Many of the US mills are having back log orders which can last till Feb 2010 next year.

Based on the above circumstances, my views are containerboard prices will rise dramatically by end Jan 2010 powered by high AOCC price and rising demand to increase stock level. Nevertheless, it is still too early to judge but based on all recent changes in the key drivers of coontainerboard industry the outlook in 1Q2010 & 2Q2010 is very promising but competition for wastepaper (AOCC) will intensified.