March 21, 2014
Entering 2013, the biggest question for the boxboard market was whether producers would be able to withstand the disruption on the trade front that appeared to be imminent given the looming overbuild in Chinese boxboard capacity. However, the answer by the end of the year was that the onslaught was not quite as bad as feared. Bleached board backorders began to rise in the spring, following the closure of International Paper's smallest machine at their Augusta, Georgia, mill. Unmade orders continued to rise during the summer, and remained strong enough late in the year that most producers independently announced their intentions to raise SBS prices starting in March 2014.
One of the reasons for this is that exports were surprisingly strong during 2013. Exports of clay coated bleached board totaled about 900,000 tonnes in both 2010 and 2011, but fell to 800,000 tonnes in 2012. This decline was spread among most of the major markets, and expectations were that this trend would continue in 2013. However, as illustrated in the chart below, Mexico was the only major destination where exports declined during the year. Exports to the rest of Latin America, Canada, Europe, Asia and the rest of the world increased, pushing total exports up to 842,000 tonnes for the year.
The resilience of the bleached board export markets during the last year has raised some hopes that the US SBS market could eke its way through the turmoil from the excess Chinese capacity expansion relatively unscathed. However, our work on RISI's latest five-year forecast indicates the downward pressure on the market is far from over. Our new forecast calls for total exports to fall 200,000-300,000 tonnes below the 2013 level by 2016 as the demand/capacity imbalance in China continues to expand. Even with this projected decline in US exports, global boxboard exports are expected to remain well in excess of import demand, leading to downward pressure on export prices.
Ken Waghorne, RISI Vice President of Global Packaging and author of the Paper Packaging Monitor, the North American Paper Packaging 5-Year Forecast, the North American Paper Packaging 15-Year Forecast and the 2012 World Boxboard Study,works out of RISI's Bedford, MA, office. Tel: +1.781.734.8922 or Email:firstname.lastname@example.org.
RISI's North American Paper Packaging 5 Year Forecast provides a forecast for supply, demand, trade, capacity, and selected prices and costs for over 15 paper packaging grades in North America. For more information, please click here.
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