AICC notes RISI’s recent recognition of a $20/ton increase in the price of kraft linerboard (compared to RISI’s previously announced $60-$70/ton increase) and finds this partial recognition of the announced increases confusing. AICC believes these changes in announcements are a result of the chaotic nature of the marketplace, which is supported by Pulp & Paper Week’s March 19th report providing a number of examples of the turmoil in the marketplace. RISI indicated that “strong demand” was behind the announced and successful $50/ton increase in November of 2020. RISI’s latest reporting downplays demand and speaks “primarily of supply side disruptions,” “cyber-attacks” and a “lack of invoicing.” Is demand strong because of the increase in long term need or is demand strong because paper is “tight?” RISI’s reporting describes the market as tumultuous and offers a series of quotes from producers, converters, and buyers in support of RISI’s claim.
AICC’s position is that, instead of providing insight, RISI’s partial increase recognition creates even more uncertainty, chaos, and tumult. RISI has created a complexity because of the respondents quoted (which includes quotes from suppliers, converters, and buyers), some have indicated they are paying an increase in price while others are not. RISI’s market reporting should have been limited to “no change at this time” or “full recognition” of the announced increases. RISI’s uncertain reporting has brought doubt on RISI’s price discovery methodology. The announcement has confused the market, possibly harmed it, and certainly has not served it well.
This brings back into question long-time concerns about the price discovery process and the validity of the index. There has been a well-known lack of transparency in how the data is collected, how consistent the data sources are from month to month, and what methodology is used to determine the announced pricing recognition.
As a result, AICC is open to, and actively exploring, alternative methods to establishing a consistent, reliable process for assessing what is happening in the containerboard and boxboard markets — one that is scientific, data oriented, and less dependent on opinion and subjective commentary.