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Packaging Raw Materials and Economics Report

February 2016

www.victorypackaging.com The fourth quarter GDP growth was lowered to 0.7 Scrap OCC Prices by Region percent. The 2016 forecasted growth looks to be in the Northeast $80 - $85/ton 2.1 percent range. Non-farm payroll rose by 150,000 in Midwest $60- $65/ton January keeping unemployment at 4.9 percent. Exports decreased 1.1 percent for the second consecutive Southeast $75 - $80/ton month. Auto sales for January ended at about 1.1 Southwest $80 - $85/ton million, down 1 percent from last January. January Los Angeles $90 - $95/ton retail sales rose 0.2 percent, better than the 0.1 percent San Francisco $80 - $85/ton forecasted. Northwest $75 - $80/ton Oil prices are up over the $30 per range late February. Natural Gas continues to decline to under $2.00 per mmbtu. This is pushing Ethane and Ethylene down, helping drive prices down.

2 Highlights Up

◆ Chicago Purchasing Managers Index (ISM) – Up by 1.3 ◆ Aluminum – Up $57.32. LME settled price average for points to 49.5 seasonally adjusted in February. Any February is $1,538.59/ton. number below 50 indicates a contracting economy. The ISM Production Growth Index is showing a growth ◆ – Flat in February for Chem Data, up in February in the following nine industries: Textile 1.5¢ for CMAI. Chem Data settled at $0.75/lb. CMAI/ Mills, Wood Products, Furniture & Related Products, IHS settled at $0.70/lb. High prices are driving more Miscellaneous Manufacturing, Electrical Equipment, imported product into the US and Mexico. Appliances & Components, Food, Beverage & Tobacco Newsprint – Up another $20 to $22 in February. Products, Chemical Products, Primary Metals, and ◆ February pricing is $545/ton for 48.8g East Coast., Products. The industries reporting contraction $582/ton for the 45g East Coast. in February are: Apparel, Leather & Allied Products, Petroleum & Coal Products, Computer & Electronic ◆ Lumber – An increase from $10 - $26/mbf in February. Products, & Related Support Activities, Framing Lumber settled at $265/mbf for Random Transportation Equipment, Plastics & Rubber Products, Lengths S-P-F. The NAHB Random Lengths composite and Fabricated Metal Products. price settled roughly flat at $315/mbf.

3 Highlights Down or Flat

◆ Linerboard – Flat in February after the surprise ◆ LDPE – Down 2¢ in February. Chem Data film grade decrease of $15/ton for January. PPW pricing is priced at $0.72/lb. CMAI General Purpose (GP) film at confirmed at $610 - $620 ($615 midpoint) for both $0.66/lb. East and West Open Market ($720 - $730 East Transaction). Medium pricing dropped $10/ton and is ◆ HDPE – Down 2¢. Pricing set at 64.5¢ for injection $510 - $520 ($515 midpoint) for both East and West molded resin, 63.5¢ for blow molded resin, and 65.5¢ Open Market. January shipments fell 1,197 billion for high molecular weight film all Chem Data. square feet from December. Inventories are up to 4.6 weeks and 2,782,000 tons. ◆ Steel – Flat for Cold Rolled and Hot Rolled Steel. Hot Rolled Steel is priced at $441/MT, Cold Rolled Steel is ◆ Folding Stock – No change in February. The priced at $602/MT. benchmark CCN price is $1,005 midpoint transacted for February. Current SBS pricing is at $1,180 ◆ Expandable Polystyrene – Down 1.5¢ in February for (midpoint transacted). Current CUK is at $1,105 the first price change since September of 2015. CMAI (midpoint transacted). PPW has added a “Series B” to pricing is $0.93 per pound. all folding carton paper grades. ◆ Diesel – Down 14.46¢ to $1.9982 national average for ◆ Multi-Wall Sack Paper, 50# – Flat in February at $1,040 February. per ton midpoint. No change in pricing since April  2014 ◆ Cotton – Down 4.79 to 56.41 (C) for #2 Cotton. Consumption is down 1.3 million bales to 109.6 million ◆ OCC – No change in February. Published at $60/ton bales due to Chinese excessive reserves. low export Midwest/Chicago for February 2016.

◆ LLDPE – Down 2¢. Chem Data Hexene/Octene prices are at $0.69/lb. CMAI/IHS Hexene prices are $0.61/ lb. This confirms the forecasted decrease. IHS still indicates Q3 and Q4 increases while Chem Data shows Q3 and Q4 decreases.

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