North American box and containerboard demand should "emerge from its lethargy" in 2015 if consumer spending finally begins to pick up, according to a  RISI, Boston, Mass., USA, report this week. The report, based on a presentation by RISI VP for paper packaging, Ken Waghorne, at RISI's International Containerboard Conference this week, noted that U.S. box demand will grow 2.1%/yr. during 2015-2016 after being stuck at less than 1%/yr. growth since 2011.

 

Waghorne explained that U.S. box demand has lagged so far behind GDP because "containerboard reflects conditions in nondurable goods manufacturing." He added, that "the consumer is finally coming out of his shell and employment is accelerating, resulting in increased real wages and disposable income and more willingness to spend."

 

While corrugated box shipments are declining relative to nondurable goods production, the growth in containerboard apparent consumption has exceeded corrugated box shipments since 2009. Containerboard demand is expected to average 2.3% average annual growth in 2015-2016. The improved outlook for containerboard demand would follow a "difficult decade" for North American producers when containerboard consumption fell from 33.2 million tons in 2003 to 31.6 million tons in 2013.

 

During this period, the share of consumption held by virgin linerboard declined from 53% to 48%, while semichemical corrugating medium declined from 20% to 18% and recycled containerboard increased from 27% to 34%.

 

Waghorne also pointed out that "high industry profitability has started to draw new containerboard capacity, particularly recycled, into the North American market." He expects 1.87 million tons of new containerboard capacity in North America from "identified" new mills or conversions of machines from other grades during 2013-2015. He estimates another 400,000 tons will come in from "assumed" conversions or new machines over 2015-2016 (since 2013, five North American newsprint machines have been converted to containerboard and other packaging grades). In addition, another 1.5 million tons may be added during 2014-2016 from "capacity creep" due to optimizing existing machines.