By Bob Tita
Industrial-packaging stocks moved higher Thursday on reports
that Georgia-Pacific Corp. plans to raise its price for
containerboard by $50 a ton this spring.
Georgia-Pacific declined to comment. But Deutsche Bank reported
the increase in a note to investors and another industry analyst
confirmed that Georgia Pacific customers had received notices of
the company's intent to raise prices beginning in April.
The increase would move the benchmark price for containerboard
to about $740 a ton. Containerboard is a heavy-weight paper used to
make corrugated cardboard for boxes and other packaging. Higher
costs for containerboard typically get passed along in prices for
corrugated boxes.
Georgia-Pacific's attempt to raise its price will likely be
followed by price increases from other containerboard producers as
well. Prices rose by $50 a ton on Sept. 1, ending a stretch of more
than two years when prices were unchanged.
U.S. containerboard makers had difficulty getting customers to
accept higher prices because sluggish economic growth and excess
production capacity kept containerboard inventories high.
Industry consolidation and tightening inventories have lately
given producers more pricing power going into the spring and summer
when demand for shipping cartons usually increases.
"If [Georgia Pacific] has in fact announced an increase, I think
it'll stick," said paper and packaging industry analyst Chip Dillon
of Vertical Research Partners. "The supply and demand conditions
are conducive for prices going up."
Shares of International Paper Co., (IP) the largest seller of
industrial packaging, were recently up 2.8% at $41.20. Rock-Tenn
Co. (RKT), the second-largest producer, was up 4% at $82.76 a
share. Packaging Corp. of America (PKG) was up 3.3% at $82.22 a
share and KapStone Paper & Packaging Corp. (KS), which
instigated the last price increase, recently was up 2.2% at $25.81
a share.
Write to Bob Tita at robert.tita@dowjones.com
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