Global cardboard and corrugated industry in 2021

Brandon Bennett:

As the president of the world cardboard Organization (WCO), I am very happy to make a report on the industry and economic environment of cardboard. As we all know, in 2020, the global economy will suddenly encounter unexpected challenges, which will affect the global employment and product demand, and bring challenges to the supply chain of many industries.

In order to better control the spread of the epidemic, many enterprises have closed down, and many countries, regions, or cities around the world are under blockade. The new coronavirus pandemic has caused disruption of supply and demand in our globally interconnected world. In addition, the historic hurricane in the Atlantic has caused business disruption and hardship in the United States, Central America and the Caribbean.

In the past, we have seen that consumers around the world are more and more willing to change the way they buy goods, resulting in the strong growth of e-commerce delivery and other door-to-door service businesses. The consumer goods industry is adapting to this change, which brings both challenges and opportunities to our industry (for example, the continuous increase of corrugated packaging for e-commerce transportation). As we continue to create value for our customers through sustainable packaging products, we need to accept these changes and make timely adjustments to meet changing needs.

We have reason to be optimistic about 2021, because the recovery levels of several major economies are different, and more effective vaccines are expected to be available in the next few months to better control the epidemic.

From the first quarter to the third quarter of 2020, the global output of cardboard continued to grow, with an increase of 4.5% in the first quarter, 1.3% in the second quarter and 2.3% in the third quarter. These figures confirm the positive trend in most countries and regions in the first half of 2020. The growth in the third quarter was mainly due to the production of recycled paper, while the production of primary fiber lost momentum in summer, with an overall decline of 1.2%.

North America:

Economic activity and employment have shown signs of recovery, but they are still far below pre epidemic levels. In addition to pandemics and hurricanes, record wildfires in the United States have devastated business and personal lives in the western states. Despite the turbulent economic environment in 2020, the U.S. economy is still on a relatively stable basis, and GDP growth is expected to continue to maintain its long-term trend of 2%. The factors affecting economic growth include the slightly weakened but stable growth trend of consumption and employment, the weak commercial investment, the increase of residential investment, and the continuous monetary easing policy.

By the end of November 2020, the U.S. economy will strike a balance between the expected surge in HIV infection and optimism about vaccine development. As in the rest of the world, it may take months for vaccines to be produced and widely distributed, which means that for some time, the new coronavirus will become an important factor in the economy. It is too early to estimate how the presidential election and the ensuing Senate election will affect the economy.

In the first half of 2020, recycled paper production in North America increased by 5.1%, while raw paper production decreased by 1.4%. According to the statistical report of American cardboard in October 2020 released by the American forest and Paper Association (AF% PA), the output of American cardboard increased by 3% compared with October 2019. Compared with the same period in 2019, production increased by 3.8%, the report said. The output of cardboard exported in October 2020 decreased by 13.4% compared with the same period last year; however, it has increased by 15% since the beginning of 2020. The operating rate of box board paper mill is 98.1%, 3.6% higher than that in October 2019, and 2.8% higher than that in early 2020. By the end of October, the inventory of cardboard had decreased by 6000 short tons compared with the previous month, and increased by 42000 short tons compared with October 2019.

It is expected that North America will continue to be a major exporter of kraft products to global destinations including Central America, Asia and Western Europe. Exports grew by about 3.5% in the past few years, but slowed in 2019 due to Global trade uncertainty and weak economy. At the beginning of 2020, Europe accounted for about 15% of North America’s total unbleached brown kraft linerboard exports (Spain and Italy accounted for about 45%). The trend of low gram weight box board continues, but shows signs of power weakening.

South America:

Covid-19, the Latin American and Caribbean Economic Commission (ECLAC) reported that the new crown epidemic will severely impact the region’s economy by 9.1% of the expected shrinkage. The forecast for 2020 shows that 2.7 million enterprises will close down, the unemployment rate will rise to 13.5%, and the poor will account for 37.7% of the population, which means that the region will experience a 10-year recession, while Brazil and Mexico are expected to lead the economic recovery of Latin America. Brazil remains the region’s leading producer of cardboard, with cardboard deliveries up 1.7% to date. In the first nine months of 2020, recycled cardboard decreased by 1%, while Kraft and semi chemical pulp increased by 5.6%.

Many international counterparts have entered Latin America to carry out business, mainly because of the high demand for packaging in the region. In Brazil, industry players have publicly announced that they will increase their business by expanding production plants or through acquisitions. Brazil plans to add more than 1 million tons of publicly announced cardboard production capacity between 2019 and 2023, and Mexico will have more publicly announced projects. It is expected that the growth rate of cardboard demand in this region will be moderate, which reflects the economic development of most central and South American countries.

Asia:

The pace of recovery across the Asia Pacific region varies. As the recession in some emerging markets is more severe than expected, economic activity in the region is expected to shrink by 2.2% in 2020 and grow by 6.9% in 2021. The long-term policy uncertainty, distorted trade measures and the slowdown of economic growth of important trading partners are restraining the economic growth of the Asia Pacific region. The recovery prospects of different countries and regions will be different, depending on the infection rate of new coronavirus and containment measures, the scale and effectiveness of policy response, dependence on contact intensive activities, and dependence on external demand.

China:

After the new coronavirus infection rate reached its peak, the Chinese government soon controlled the further spread of the epidemic and began to resume work and production in an orderly manner. At the same time, measures were taken to prevent the recurrence of infection or imported cases in China. In addition, China has fully implemented the policy of banning the import of solid waste, including waste paper. In the first five months of 2020, the import volume of waste paper will drop to 2.4 million tons, 44% lower than that in the same period of 2019.

China’s stricter environmental policies have stimulated the transformation of the cardboard industry, which has led to industry integration. More stringent waste paper policies have led to the expansion of the cost disadvantage of smaller cardboard producers, which may lead to closure. According to the public report, the largest linerboard producers will receive the most wastepaper quotas in 2020, which will also increase their share of total capacity.

Imported recycled pulp is a new substitute for waste paper. In 2018, China’s customs authorities registered the import volume of 300000 tons, and the import volume increased to 920000 tons in 2019. In the first five months of 2020, 720000 tons of recycled pulp will arrive in China. Due to the rapid development of e-commerce, China imported 1.56 million tons of corrugated base paper and 2.2 million tons of cardboard in 2019.

Japan:

Japan, the world’s third largest economy, grew 5% in the third quarter of 2020, rebounding from a 7.9% decline in the second quarter (compared with a 0.6% decline in the first quarter). Business sentiment in Japan recovered slower than expected, stressing that it will take some time to recover from the impact of the pandemic. GDP is expected to grow by 2.3% in 2021.

From 2020 to 2025, the Japanese paper packaging market is expected to grow at a compound annual growth rate of 6%. Due to the biodegradable and non-toxic properties of corrugated board, as well as its low gram weight and durability, it is expected that the use of corrugated board packaging carton in this region is still very strong. China is the most important export market of Japanese corrugated base paper.

In the first five months of 2020, Japan’s export volume of corrugated base paper to China will reach 87000 tons, six times that of the same period in 2019, accounting for 30% of the total export volume.

Europe:

Across Europe, the economic impact of the pandemic varies widely, as does the expected recovery. This reflects the spread of the virus, the public health measures taken, the sector composition of the national economy, and the control of the epidemic by national policies. The autumn 2020 economic forecast predicts that the European economy will contract by 7.8% in 2020, then grow by 4.2% in 2021 and 3% in 2022. Compared with the economic forecast in the summer of 2020, Europe’s growth forecast is slightly higher in 2020 and lower in 2021.

It is not expected that the production of cardboard in this region will return to the pre epidemic level in 2022. In Europe, the demand for cardboard in 2020 is less affected than expected by the pandemic. Cardboard demand fell 3.6% in the second quarter, and recovered 0.9% in the third quarter. Due to the good performance in the first quarter, the overall growth has been 0.9% since the beginning of 2020, and it is expected to increase slightly by 1% for the whole year. However, the economic recovery still comes from the control of the epidemic situation. With the emergence of new capacity in the next few years, utilization is expected to decline.

Through all of these challenges, we have seen employees across the industry continue to work hard and provide cardboard products to keep important supply chains open for the delivery of food, medicines and other important supplies.

straw wrapping paper_6_


Post time: Jan-20-2021

WhatsApp Online Chat !