Middle East Paper Co. (MEPCO) CEO Sami Safran highlighted that declining global containerboard prices have pressured the company’s selling prices and profit margins. Despite this, domestic sales surged 30.73% quarter-on-quarter (QoQ), while exports rose 11.54% QoQ in Q1 2023. Domestic sales accounted for 61% of total sales in Q1 2023, down slightly from 63% in the same period last year, while exports increased to 39% from 37%. Global containerboard demand fell by nearly 2% in 2022 compared to 2021, but Safran expects a 1.7% recovery in 2023. The industry’s cyclical nature means price fluctuations are common, though the CEO remains cautiously optimistic about demand recovery. For markets, the decline in containerboard prices reflects broader economic slowdowns and reduced industrial activity, particularly in key markets like China. Traders should monitor global demand trends and MEPCO’s cost management strategies to assess future profitability. The company’s strong domestic sales growth in Saudi Arabia and the Gulf could provide a buffer against weaker export performance, but sustained low prices may pressure margins unless production costs decline. MENA investors should focus on MEPCO’s ability to navigate the volatile containerboard market and its potential to benefit from regional industrial growth. Key indicators include quarterly sales reports, global demand forecasts, and the company’s capital expenditure plans. The 1.7% expected demand growth in 2023 could signal a turning point if production efficiency improves.
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