State of the Corrugated business

NEW YORK — August prices for cardboard box parts, which will be reported this weekend, will likely hold steady as inventories hover around a 30-year low, despite rising production, Wall Street analysts said Monday.
Credit Suisse analyst C.A. Dillon III said that at the end of last month containerboard inventories were at their lowest level since 1980.
Meanwhile, the industry's July utilization rate, which gauges how much of its manufacturing capacity is being used, was 88.6 percent, well above the 82.8 percent year-to-date level, UBS analyst Gail Glazerman said.
She also said production in July rose 1 percent, month over month, to its highest level since October.
"August prices will be reported this weekend, and evidence is mounting that prices will remain level once again," said Dillon.
Investors are watching containerboard prices for signs the industry's strict production discipline, which has resulted in the low inventories, will continue and thus boost the likelihood of sustained profits when the recession ends.
Dillon's favorite pick is the stock of Lake Forest, Ill.-based Packaging Corp. of America, which he rates as a "Buy"; Glazerman's top pick is the stock in Memphis, Tenn.-based International Paper Co., which she rates as a "Buy."
In afternoon trading that was marked by widespread declines, Packaging Corp. of America fell 40 cents, or 2.1 percent, to $18.30 and International Paper declined 48 cents, or 2.4 percent, to $19.52.