International Paper's stock surged 5.45% during pre-market trading on Thursday, following news of a significant price increase in the containerboard market and the company's strategic capacity reductions.
Packaging Corp of America announced a $70 per ton price increase for linerboard and corrugating medium, effective March 1, marking the first such increase in 13 months. This development comes amid industry consolidation and capacity reductions, with International Paper having shut down 1.8 million tons of capacity last year - representing almost half of the total industry reduction.
Sources indicate International Paper has been experiencing firmer supply/demand conditions for containerboard and boxes, with the company's significant capacity cuts contributing to tighter market conditions. The industry has seen $20 billion in mega-mergers over the past 18 months, including deals involving International Paper, further consolidating the market and potentially improving pricing power for remaining players.