Recycled Material, Recovery Drive Paper Packaging Market

Within the recycled materials market, paper packaging is the largest segment, accounting for around 65% of all recycled packaging, according to a release this week by U.K.-based Smithers Pira. Paper and paperboard also have the highest recycling rates worldwide (with the exception of glass in some countries). Demand for paper packaging will continue to grow, due to the manufacturing economies of China and other emerging countries. The overall market for recycled paper packaging is expected to grow at a compound annual growth rate of 5% to reach $139 billion in 2018.

In the U.S. and Canada, paper and paperboard recovery has increased by 81% since 1990. The recycling rate is 70% in the U.S. and 80% in Canada. European countries have reached an average 75% rate for paper recycling, with some countries such as Belgium and Austria achieving almost 90% recovery. In the U.K., many other countries in Western Europe, the paper recycling rate is at 80%. Eastern Europe and the rest of the world tends to lag behind in paper recycling, mainly due to a lack of adequate recycling infrastructure, Smithers Pira notes.

Recovered paper accounts for 37% of the U.S. pulp supply. The demand for paper pulp is growing rapidly in developing countries; China, India, and the rest of Asia are the fastest-growing users of paper per capita. The increase in the transit packaging sector in China, combined with growing consumerism, is leading to rapidly growing demand for paper packaging. Paper packaging demand in the country has been growing at a rate of 6.5% since 2008, far higher than anywhere else in the world. Along with this demand for paper packaging, the demand for recycled paper is also increasing.

Containerboard packaging represents the largest market for recycled paper packaging. About 30% of the paper and paperboard recovered in the U.S. is used to produce containerboard. A large amount of recovered paperboard is exported to China, while the rest is used to produce other paper packaging such as boxboard, which includes folding boxes. In 2011, exports of recovered paper to China and other countries accounted for a huge 42% of the paper collected in the U.S. for recycling.

It is estimated that the demand for recycled paper will exceed supply by 1.5 million metric tons of recycled pulp per year by 2018. The paper industry is investing in paper packaging plants in the developing world to satisfy growing demand in these regions.

In the future, paper packaging is the most obvious choice for replacing polystyrene packaging. Many key players in the industry have already switched to or are experimenting with paper products. For example, Starbucks uses only paper cups and is actively involved in paper recycling initiatives, including closed-loop systems in select locations. Further improvements in paper recycling will also help to grow the market, as recent advances have made it possible to recycle coated paper packaging along with corrugated paper. This will reduce the cost of recycling significantly, driving up the demand for recycled paper.

One of the fastest-growing markets for recycled paper is the food-service market. Although it represents a small portion of the overall market for recycled paper (less than 1%), it is expected to grow faster than the overall demand rate for recycled paper packaging. With the economy improving, the food-service market will start to see more growth and, combined with increasing consumer awareness of litter and solid waste caused by discarded plates and glasses, will continue to drive the demand for recycled paper. Industry players are also getting active in this market as pressure from governments and various environmental groups keeps increasing, according to Smithers Pira.

TAPPI
http://www.tappi.org/