Box demand, output plummets



Industries such as home-building that saw unprecedented demand during the coronavirus pandemic have begun to swing back to much lower levels, and the consumer shift from goods to services has significantly affected box and packaging demand.Get more news about Boxes Cardboard,you can vist our website!

According to the Fibre Box Association, Itasca, Illinois, shipments of cardboard in the U.S. declined by 8.4 percent in the fourth quarter of 2022 compared with the previous quarter—the largest decline since 2009. The organization also reports cardboard manufacturer operating rates are the lowest since 2009, falling to 80.9 percent in the fourth quarter.

Adam Josephson, managing director, equity research, at Cleveland-based KeyBanc Capital Markets, published a note in late January stating that the packaging sector at the end of 2022 “had echoes of the Great Financial Crisis everywhere one looks.”

The American Forest & Paper Association (AF&A), Washington, reports a 5 percent decrease in total containerboard production last year compared with 2021 figures, adding that most containerboard grades experienced double-digit percentage declines in the fourth quarter of 2022.
The group says drops in domestic and export production contributed to operating rates in the high 70s, in some cases.

“The shift from spending on services to spending on goods that we saw during [the] pandemic is reversing, and it’s that simple,” Josephson told Recycling Today late last year.

“During the pandemic, people bought more goods than they ever knew what to do with for their homes, for transportation, you name it … and now they’re shifting back to going out and traveling. Furthermore, demand for goods is influenced by interest rates, and the higher interest rates go, the more difficult it is for people to borrow to buy a house or a car, and you’re seeing all the effects of that now.”

In a January earnings conference call, Packaging Corp. of America (PCA), Lake Forest, Illinois, reported inflation, rising interest rates, a cooler housing market and a shift from goods to services all have dampened box demand.

“We expect box demand on a per-day basis to be similar to fourth-quarter levels, although we expect higher total volume with corrugated plants having four additional shipping days,” PCA Chairman and CEO Mark W. Kowlzan said of the company’s expectations in the first quarter of 2023.

Memphis, Tennessee-based International Paper (IP) also reports lower demand affecting margins. During a Jan. 31 earnings call, CEO Mark Sutton said the company experienced a similar decline of about 6 percent in daily box shipments in the fourth quarter of last year as it did in the third quarter.

IP reported lower sales volumes for corrugated boxes and containerboard, citing consumer spending focused on nondiscretionary goods and retailer inventory destocking as factors. The lower demand resulted in increased economic downtime.