BOARDS FACING CHALLENGES: SMITHERS

Global containerboard and corrugated board demand is facing a series of challenges and shifts in market dynamics across the next five years, according to print and packaging industry analyst Smithers.

These are profiled, and quantified in the new market data report – The Future of Corrugated Board Packaging to 2029 – from Smithers.

Smithers’ analysis of capacity changes, pulp pricing, and end-user demands shows that last year, global containerboard production fell by four per cent to 183.4 million metric. These were converted into around 165 million tons of corrugated board, a decrease of more than seven per cent on the year before, with value reaching US$224bn.

Smithers says this reflects the end of the period of disruption in world supply that began in 2020 with Covid-19, and which was characterised by disruption to global logistics impacting demand, price fluctuations leading to high inventories, and subsequent destocking.

Smithers is now forecasting slight growth across this year, with value increasing to US$232bn. It says this will be followed by a broader recovery in world demand, at an average annual growth (AGR) of 2.5 per cent by volume. This will see world corrugated volumes reach 190 million tons in 2029; value in the market will increase at 3.7 per cent a year to $278bnn, at constant prices.

Many major containerboard suppliers have already invested in increased capacity, which will manifest in low operating rates across much of the Smithers forecast period. This is prompting moves that will redraw the commercial landscape for corrugated, with four of the six largest converters worldwide –  Smurfit Kappa/WestRock and DS Smith/International Paper – pursuing multi-billion-dollar mergers with each other. Other firms are rationalising operations; delaying further investment, taking extra downtime or even closing older mills and box plants.

Across 2024-2029, demand for corrugated packaging will vary across the 13 different end-use sectors Smithers profiles. The packaging and transportation of food products accounted for 46 per cent of the consumption of corrugated packaging material during 2023, a relatively constant level since 2016, but is expected to change slightly to 47 per cent by 2029. This will include a new surge for corrugated grades for processed foods, although growth in fresh food & produce will be slower, and electrical goods are expected to have the most attractive volume growth of all products.

Multiple opportunities are arising for corrugated materials. Their recyclability means they are increasing being favoured by brand and legislators, not just in transit, but consumer-facing primary packs. This is pushing converters towards finer, premium flute grades that can compete with folding cartons in sectors such as cosmetics, confectionery, and consumer electronics.

Legislation such as the EU’s recently approved Packaging and Packaging Waste Regulation (PPWR) are opening other opportunities. The PPWR will ban certain single-use plastic formats by 2030, including for smaller volume produce packs, and collation films for multipack beverages and food. Similar potential exists in food-service applications, is effective non-PFAS oil and grease resistance coatings can be integrated into existing corrugated lines.

Sales of retail-ready packaging (RRP) boxes are also forecast to increase rapidly due to the increased popularity of budget grocery chains in developed markets, and growth of retail infrastructure across Asia. In some instance converters will benefit from the installation of a new generation of high throughput inkjet presses for corrugated board, producing higher quality customised RRP.

The same equipment can be used to capitalize on the ongoing rise in e-commerce shippers. Twinned with design innovations these can produce visually appealing, consumer-oriented boxes that enhance branding and offer superior consumer returns.

The Future of Corrugated Board Packaging to 2029 from Smithers is available to purchase now, priced €6,350.