According to a recent earnings call, Packaging Corporation of America (PCA) said it will continue emphasizing the strength and flexibility of its virgin kraft offerings while optimizing opportunities across both virgin and recycled grades.
CEO Mark Kowlzan said PCA is not shifting away from its long-standing focus on virgin kraft products following the Greif acquisition. “You take advantage of the opportunity that comes along, whether it’s a recycled opportunity or a virgin kraft opportunity,” Kowlzan said.
PCA President Tom Hass further reinforced that position, noting the company still views virgin kraft as its primary platform. “Directionally, we want to be able to optimize whatever properties fit our customers’ demands, but … we are still primarily virgin kraft, and we’re not going to change that.” He added that PCA sees opportunities to better optimize performance between virgin kraft and recycled grades.
PCA completed its acquisition of Greif’s containerboard business last year, increasing recycled products to roughly 30 percent of its portfolio from approximately 20 percent previously. The move comes as demand for recycled containerboard continues growing across portions of the packaging market. International Paper recently announced plans to acquire North Pacific Paper Company (Norpac), citing increased customer demand for lightweight recycled packaging papers.
Kowlzan said packaging demand remained solid through April and that the company expects momentum from the first quarter to continue into the second quarter, supported by normal seasonal increases in corrugated volumes.
First-quarter corrugated shipments increased 1.2 percent year over year and rose 19.9 percent when shipments from the Greif facilities are included. Containerboard production totaled 1.398 million tons during the quarter. Inventory declined by 39,000 tons sequentially but increased 48,000 tons year over year, primarily due to the acquisition.
Sales volumes in PCA’s paper segment increased 2.7 percent from the prior-year period.
Hass also said the company expects containerboard and corrugated product pricing to increase during the second quarter as previously announced increases are implemented. He noted that containerboard prices are up $50 per ton since the start of the year, following a $70-per-ton increase in January and a $20 decrease in March.
PCA is running its facilities at very high rates, even as numerous mills have closed including the PCA plant in Richmond, Virginia, and several closures from Greif. It is the third largest producer of containerboard products in North America, with 91 corrugated plants and facilities.
