Shares of major paper and packaging firms tumbled Monday after pricing data for packaging paper and board in February showed an unexpected drop in containerboard costs. International Paper (NYSE:IP) led the declines, falling 7.1% on the session, while Packaging Corp of America (NYSE:PKG) declined 6.8% and U.S.-listed Smurfit Westrock (NYSE:SW) slipped nearly 5%.
Stifel cited a RISI release issued on Friday that published the February price indexes for packaging paper and board. According to that RISI data, containerboard prices decreased by $20 per ton, a change Stifel characterized as unexpected and linked to widening discounts in the market.
Movements in boxboard grades were more muted. RISI showed boxboard prices unchanged month-over-month across all categories for a second straight month. Boxboard trends matched Stifel's expectations for February. The report noted that SBS folding paperboard had earlier seen a combined decline of $100 per ton across November and December, a move that preceded the stability observed in February.
Kraft paper prices also registered no change month-over-month, aligning with Stifel's forecast.
Stifel highlighted that exposure to U.S. paperboard pricing varies across issuers. Graphic Packaging (NYSE:GPK), Smurfit Westrock and Sappi were identified as having the most exposure to U.S. paperboard prices, while Stifel emphasized that International Paper and Smurfit Westrock are the names with the greatest exposure to the recent containerboard price decline.
The brokerage firm warned that the containerboard price movement is likely to exert pressure on near-term share price performance for the most exposed companies. Stifel further noted that it had not anticipated the $20-per-ton decline reported by RISI.
Below are the key takeaways and risks drawn from the pricing release and market reaction.