Containerboard and paper stocks are down on weak industry data and downgrades from Bank of America Merrill Lynch on Packaging Corp and International Paper to Neutral from Buy.
BAML's containerboard breakdown: "Box shipments were down a surprising 3.0% y/y (on both an actual and average-week basis) while inventories declined 47k tons vs. the typical 70k ton decrease seen over the last 10 years. We had been expecting ~1% growth based on our last survey report and have written that the industry, between maintenance and economic downtime, needs to drop inventories 400- 500k tons between February and June to get back into balance (so about 100k tons or more, per month). The data suggests producers are not being able to manage their excess inventory and production, and we now anticipate increased likelihood of another price cut during 2Q."
Notable decliners include International Paper (NYSE:IP) -5.6%, Sonoco Products (NYSE:SON) -2.7%, WestRock (NYSE:WRK) -7.7%, Packaging Corp of America (NYSE:PKG) -8.2%, Graphic Packaging (NYSE:GPK) -3.5%, Greif (NYSE:GEF) -2.9%, Domtar (NYSE:UFS) -2.4%.
Subscribe for full text news in your inbox