In-depth analysis of the current U.S. cardboard/carton market and trends, and the prospects of the international paper industry

September 04, 2020

Driven by the limited supply and strong demand growth in 2016-2018, the profit margin of containerboard has risen sharply. The three giants in the US paper and packaging industry, namely International Paper, Westrock and PCA, have seized the opportunity to Much of the sealed paper production capacity has been transformed into the production of cardboard paper. Currently, the industry is staring at barriers to capacity growth that have not been seen in decades. At the same time, the Covid-19 pandemic has increased the demand for packaging cartons. Opportunity seems to have become a threat in an instant, and cardboard manufacturers are facing an invisible war.

With the difficult decision before us, the three giants will face a series of challenges. Fortunately, all three are able to generate large amounts of cash and wisely avoid over-indulging in debt during economic prosperity. In addition, all three have low-cost assets, which should be able to help them tide over difficulties in order to have a better life and greater profit margins in the future.

Although the stock price of cardboard paper manufacturers has fallen from a historical high in 2018 to a recent historical low, the reality is still between prosperity and depression. The recent collapse of confidence between market participants and sellers has provided opportunities for patient buyers. In the next few years, with the economic growth, the demand for carton packaging will increase. Although supply barriers appear to be threatened, small, high-cost companies will be eliminated, just as they did in the previous downturn.

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Author:

Ms. Lily Yu

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