FAS began an inspection of the Arkhangelsk Pulp and Paper Mill due to the increase in cardboard prices by more than 40%

The active rise in prices for products for the production of corrugated packaging in the second half of 2023 raised questions from consumers and the regulator. The FAS began an inspection of the Arkhangelsk Pulp and Paper Mill due to a rise in product prices by more than 40%, and also sent inquiries about the validity of the cost to other manufacturers. Experts note that containerboard prices are recovering after falling in 2022, but have not yet reached 2021 levels, and predict price stabilization at the beginning of the year.

The FAS opened a case against the largest Russian manufacturer of corrugated boxes – Arkhangelsk Pulp and Paper Mill (APPM; owned by the Austrian private fund Zinner Privattiftung). According to the department, the reason was the company’s increase in prices from August to November 2023 by 42.3% and 41.4%, respectively, for cardboard and paper used to make corrugated cardboard. From it, in turn, corrugated packaging is produced, which is used, among other things, for storing and transporting food, medicine, building materials, furniture and household chemicals.

“The prices set since September 2023 exceeded the amount of necessary expenses and profits,” the FAS notes.

If APPM’s guilt is proven, the manufacturer faces a fine of up to 15% of annual turnover. However, the FAS explained to Kommersant that the amount “depends on the presence of mitigating and aggravating circumstances and is calculated in each specific case.” At the end of 2022, APPM’s revenue according to RAS amounted to 44.6 billion rubles. The company does not comment on the situation.

In ten months, APPM, according to the Center for System Solutions, produced 485 thousand tons of cellulose containerboard (CTC), of which it independently processed more than half into final products. The largest producer of CPK in the Russian Federation is Ilim (707 thousand tons in January-October), the third largest player in this sector is the Syktyvkar LPK (produced 145 thousand tons of CPK; since the end of last year it has been owned by Cesar-Invest). Participants in the containerboard market also received requests from the FAS to justify the price increase, but, according to Kommersant’s information, they have not yet responded to them. The companies do not comment on the situation.

At the end of last year, food manufacturers complained to the government about the rise in price of cardboard packaging. But, as explained in the materials of the League of Waste Paper Recyclers (League PM) for a meeting in the Ministry of Industry and Trade at the end of December, the cost of container boards throughout almost the entire 2023 was below the values ​​of 2021-2022 and significantly below the peak indicators in these years – they were observed during from the second quarter of 2021 to the second quarter of 2022, and then prices for CTK were in the range of 65–70 thousand rubles. per ton, and for recycled container boards – 47-55 thousand rubles. per ton (excluding VAT). In the period from August to November, which is indicated in the case regarding APPM, the cost of these products was in the range of 40–55 thousand rubles. and 28–48 thousand rubles. per ton respectively.

In general, as noted in the PM League, container boards are characterized by an increase in prices in the fourth quarter of the year, due to a seasonal increase in demand from corrugated cardboard packaging manufacturers due to an increase in the production of consumer goods in October-December. But the fourth quarter of 2022, which serves as the basis for comparison in the APPM case, was an exception: due to the massive commissioning of production facilities during the year and market uncertainty, prices fell, the organization points out. In turn, prices in the fourth quarter of 2023 were affected by the introduction of export duties on pulp, paper and cardboard from October 1.

As Denis Kondratiev, managing partner of the Center for System Solutions, notes, in recent months prices for container boards have been recovering to 2021 levels, although they have not yet reached this level. There are fundamental reasons for the price increase, the expert says: the depreciation of the ruble against reserve currencies in 2023, which led to an increase in all foreign exchange costs in the cost structure, and an increase in depreciation costs for equipment and components, almost 100% of which are supplied from other countries. countries

According to Mr. Kondratyev, in the future, an increase in the volume of containerboard in the domestic market will put pressure on prices, and during the first quarter of 2024, the most likely scenario is their stabilization. As sources in the market told Kommersant, the next industry meeting on the issue of price increases will take place on January 23 at the Ministry of Industry and Trade.

Olga Mordyushenko