Слабый спрос тормозит развитие отрасли коробок из гофрокартона в США: устаревшие бумажные фабрики могут быть выведены из эксплуатации быстрее в преддверии консолидации отрасли!

At the start of this summer, concerning the US

There was much discussion about whether the industry had emerged from recession. One veteran industry analyst optimistically predicted that linerboard producers would respond to inflation by raising prices and pinning their hopes on a recovery in demand.

However, recent second-quarter data poured cold water on that. Although industry players expected demand to rebound somewhat, the reality is that the recovery was far from enough to ease the difficulties facing older mills. At the same time, a new generation of 100% recycled paper machines kept increasing production throughout the year.

Doug Larson, a paper packaging pricing analyst at Bloomberg, noted in a mid-August presentation: "The paper produced by these new machines appears to be of higher quality than that from previous 100% recycled paper machines, and they run more efficiently as well." He further analyzed, "If demand cannot improve, these two factors could put even greater pressure on older equipment."

Bloomberg recently hosted a webinar titled "Linerboard Report - Market Dynamics: Reviewing Q2 2024 Sentiment and Data." Richard Burke, senior analyst for basic materials at Bloomberg, Ryan Fox, corrugated market analyst, and Doug Larson spoke at the event.

Fox said: "We entered this year full of expectations, and everyone hoped the linerboard market would see a recovery. More than a year ago, many organizations, including Bloomberg, forecast that linerboard shipments would grow in 2024. However, as the end of 2023 approached, we found that headwinds on the demand side persisted, and this year was destined to be a difficult one."

Larson noted that last year the supply side of linerboard was "very active," with 5 new machines added and 2 million tonnes of capacity added. Such a scale of expansion was the first since 1996.

"Despite the addition of 2 million tonnes of capacity, total linerboard capacity in early 2024 did not change significantly compared with last year," Larson said. "Because nearly 2 million tonnes of capacity was also permanently shut down last year. So the net increase was actually not large."

"What we see is a shift in the capacity mix: all the newly commissioned machines use 100% recycled material, while those that closed mainly used virgin fiber or mixed raw materials. In addition, this new capacity comes mainly from independent or mid-sized suppliers, while most of the closed capacity belonged to industry giants such as International Paper and WestRock. With total linerboard industry capacity of about 40 million tonnes, a shift of 4 million tonnes is undoubtedly a huge change."

Larson further pointed out that, in addition to the 2 million tonnes of capacity permanently closed last year, some large companies in the industry also temporarily halted more than 2.5 million tonnes of capacity for economic reasons, which made the 2024 production shortfall even more pronounced.

"Even if the permanently closed capacity is averaged at 660,000 tonnes per year, in the first quarter alone temporary downtime at International Paper and WestRock was close to 165,000 tonnes. This again shows that the supply-demand imbalance is quite severe."

Regarding the recently closed McKinley Paper recycled paper mill in Port Angeles, Washington, Larson said that, based on his data analysis, it was a relatively low-cost mill. Although he could not disclose the specific reasons for the decision inside McKinley, the event again shows that older mills are facing increasing pressure to survive.

He also pointed out that the inefficient operation of older equipment puts considerable pressure on companies.

"If market demand does not improve significantly, those older machines still in use will face even greater challenges. If demand remains sluggish, we are likely to see more machines shut down."

Turning to linerboard shipments, Fox said that although month-over-month data showed improvement, year-over-year shipments were still down about 1%. He predicted that third-quarter shipments would be flat with the second quarter. Notably, historically, the third quarter is usually the best-performing quarter of the year.

"Although everyone had expectations for this year's market performance, first-quarter shipments fell 1.1% from a year earlier, the lowest since 2016. This shows that the year did not start well," he said. "Although the second quarter grew 1% quarter over quarter, year-over-year data show that shipments were still down about 1%."

Turning to the third quarter, he said: "We expect conditions to improve, but not by much."

Larson pointed out that a positive signal is that linerboard exports increased in the first half of the year. This effectively prevented a sharp climb in domestic inventories and pushed mill operating rates above 90% in the first quarter for the first time, reaching a new high in nearly a year.

"The growth in export demand is certainly a positive, but the first-quarter data also indicate that downtime in the industry will continue," he further analyzed. "I think the peak of downtime in the third and fourth quarters of last year is over, but we are unlikely to return to the 93% or 94% high operating rates of the pandemic period. Still, maintaining operating rates above 90% is possible."

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-379638.html