Current Containerboard Market Conditions In North America: Part 1
Between February and May, our economy was saturated with financial hardships when the COVID-19 pandemic hit our communities. We were faced with a great challenge, to survive health-wise and business-wise. During this time, paper mills moved ahead with scheduled downtime production to support the lack of demand. While businesses started to improve, southern paper mills were hit with further devastation when stormy weather closed operations impacting both recycled and virgin paper mills. In contrast, June, July, and August of 2020 saw corrugated box shipments in North America soar to the second highest in the past thirty years.
While Containerboard mills are operating at full capacity; the factors mentioned above have resulted in extended delivery lead times to the corrugators. This holds true for Greenpac and TenCorr. Currently, our corrugated sheet lead times continue to grow.
Paper shortage and extended lead times for the corrugators inevitably impact box plant lead times. The demand for corrugated products by e-commerce companies is expected to see corrugated box shipments increasing by a minimum of 2% annually for the foreseeable future, irrespective of the state of the economy.
This combination of economics results in price changes and Containerboard mills have already announced price increases. The containerboard and corrugated industry must continue its significant capital investment to keep pace with the growing demand for corrugated products. The five major containerboard mills recently announced a price increase price of $50 US per ton on Linerboard (7%) and Medium (8%) on shipments as of November 2, 2020. This is the first price increase of this magnitude by Containerboard mills since March 2018.
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