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Packaging Raw Materials and Economics Report

May 2015

This report is published monthly and is a consolidation of industry published raw material prices that are the primary cost drivers that move packaging prices in the marketplace.

The Q1 GDP was initially published as +0.2%. The revised number is a -0.7% for a swing of almost 1%. Retailsales for April rang up 0.1% growth excluding auto. Lightvehicle sales were off 3.5% from March. April existinghome sales were down 3.3%. New home sales were517,000 for April, up from 484,000 in March. New homeinventory is about 4.8 months, down slightly from 5.1months in March. Employment is improving but newjob quality remained poor. 93.2 million workers are notparticipating in the labor force.

Petrochemical producers have been downsizing andcutting back on CapEx. That said, oil prices look to beedging back up. The month end settled at $60.20/bbl,up almost $12 from January’s close. Nat Gas remainsstable at 2.65/mmbtu, creating some stability in theelectricity markets.

Scrap OCC Prices by RegionNortheast $75 - $80/tonMidwest $60 - $65/tonSoutheast $75 - $80/tonSouthwest $75 - $80/tonLos Angeles $75 - $80/tonSan Francisco $70 - $75/tonNorthwest $65 - $70/ton

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Highlights Up◆ Chicago Purchasing Managers Index (ISM) – A jump up 1.3 points to 52.8 seasonally adjusted. Any number above 50 indicates an expanding economy. The ISM Production Growth Index is showing a growth in May in the following fourteen industries: Apparel, Leather & Allied Products, Furniture & Related Products, Paper Products, Food, Beverage & Tobacco Products, Nonmetallic Mineral Products, Plastics & Rubber Products, Electrical Equipment, Appliances & Components, Primary Metals, Transportation Equipment, Printing & Related Support Activities, Fabricated Metal Products, Machinery, Miscellaneous Manufacturing, and Chemical Products. The two industries reporting contraction in May are: Textile Mills and Computer & Electronic Products.

◆ Aluminum – Up $12.02. LME settled price average for May is $1,805.11/ton. Alcoa is investing $22 million in jet engine production using aluminum components.

◆ LLDPE – 5¢ increase (6.4%) in May. Chem Data Hexene/ Octene prices are at $0.83/lb. CMAI/IHS Hexene prices are $0.75/lb. This includes the 18¢ downward

adjustment in January. Tight supply in Asia and Europe is helping move prices up globally. Supply is at 47 days, 1 to 2 days below normal.

◆ LDPE – A 5¢ increase for both Chem Data and CMAI Chem Data film grade priced at $0.86/lb. CMAI General Purpose (GP) film at $0.82/lb. This includes the 21¢ downward adjustment in January.

◆ HDPE – The same 5¢ for May for both Chem Data and CMAI Pricing set at 78.5¢ for injection molded

resin, 77.5¢ for blow molded resin, and 79.5¢ for high molecular weight film all Chem Data. Operating rates are running 98.6% over the last three months with the inventory draw.

◆ Expandable Polystyrene – Confirming the 5¢ May increase. CMAI pricing is $1.035 per pound.

◆ Steel – Up $15.00 in May for Hot Rolled, up $10.00 for Cold Rolled. Hot Rolled Steel is priced at $515.00/ton and Cold Rolled Steel is priced at $650/ton. Oil production may have hit bottom and the support industry is showing signs of recovery.

◆ Diesel – Up 10.52¢ to $2.8875 national average for May.

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◆ Linerboard – No change in May. PPW pricing is confirmed at $625 - 635 East Open Market ($735 - $745 East Transaction). Inventories are down seasonally from 4.4 weeks to 4.3 weeks. Medium is pricing is $560 East Open Market and $580 West Open Market.

◆ Folding Carton Stock – Flat for all grades in May. Current SBS pricing is at $1,180 (midpoint transacted). Current CCN remains unchanged at $955 (midpoint transacted). Current CUK is at $1,105 (midpoint transacted). Graphic Packaging Q1 earnings had sales up 5.2% on improved volume and mix. West Rock, the new Mead Westvaco RockTenn acquisition is still pending approval.

◆ Newsprint – Down another $10 in May to $550/ton for 30# East Coast. Pricing is down $45 since December of 2014.

◆ Multi-Wall Sack Paper, 50# – Flat in May at $1,040 per ton midpoint. No change in pricing since April, 2014.

◆ OCC – Flat at $60/ton low export Midwest/Chicago in May.

◆ Polypropylene – Down 1¢ for Chem Data, flat for IHS. Chem Data settled at $0.675/lb. CMAI/IHS settled at $0.64/lb. This includes the 10¢ CMAI downward adjustment.

◆ Lumber – Relatively flat for May. Framing Lumber settled at $259/mbf for Random Lengths S-P-F. The NAHB Random Lengths composite price settled at $315/mbf.

◆ Cotton – Down 4.36 to 62.25 (C) for #2 Cotton. Rain in Texas is slowing planting but poor consumer spending is hampering demand.

Highlights Down or Flat

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