Roughly one-third of Sonoco's contracts for paper-based packaging are tied to the price of OCC, and management expects OCC prices to trend at $50/ton-$60/ton for the remainder of the year. Management enjoyed favorable price-cost dynamics in 2018, increasing selling prices to offset materials and non-materials cost increases. However, as raw material prices have come down, we expect Sonoco to give back some of the product price increases that it instituted in earlier times. The company might need to see progress on other operational initiatives to counteract this potential headwind. The negative outlook reflects our view that there is a one-in-three chance of lower ratings for Sonoco during the next two years, as the company's appetite for debt-funded acquisitions to enhance
