US Paper, Board Output Shoots up 2 percent

Writing in Fastmarkets RISI’s PPI Pulp & Paper Week, editor Greg Rudder reported that US paper and paperboard production shot up in February and was up nearly 2 percent year-to-date in an early indicator for the panic-buying frenzy that occurred in March due to the coronavirus Covid-19. The increase on a year-over-year basis was one of the few in which production grew sequentially since the Great Recession.

Last month, demand and production appeared to be growing at an even bolder pace than in February, and expectations called for "good" April demand as well. The confidence, primarily in the packaging board and tissue segments, came from an at least three-week surge of grocery stores and online e-commerce buying for food and consumer products including notably toilet paper that are transported in corrugated boxes and folding cartons.

For example, tissue production popped up 6 percent in the first two months of 2020 to 1.3 million tons, according to American Forest & Paper Association figures.

In March, reports told of the unusual, unexpected demand surge that gripped the packaging and tissue market's supply chain. North America's largest tissue paper producer reported shipping at 120 percent of its capacity.

This wave of stronger-than-expected demand is expected by most to weaken, possibly tremendously by May or into mid-year, as the impact of "non-essential" businesses closed down and workers out of jobs affect the overall American economic landscape.

Some industry contacts further believed that these changes caused by the outbreak were rearranging the buying rhythm of Americans for some time to come.

"Once people get used to doing something, it becomes their habit," said a contact for a paper and packaging mill, referring to online orders delivered to homes and picked up at stores.

"It was happening already (pre-virus), but it's going to grow exponentially now. Covid-19 has accelerated this," the contact said.

One tissue company official said e-commerce has especially sunk into the daily lives of generations other than millennials.

"Our expectation is that the adoption rate" in e-commerce ordering will "speed up," the contact said.

The contact expects post-virus that "click and collect" online orders pickup at the front of grocers and retailers will continue to be more widely used, because it will be faster than waiting for home delivery for some goods or food. The click and collect model is seen as a merging of e-commerce and brick-and-mortar stores.

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