Packaging / Advertising & Office

Globally, factories producing cardboard are cutting their output, which may be the latest worrying sign of the slowdown in global trade.

The demand for cartons has declined, and the global economy is hardly optimistic

According to the observation report of the import and export data of Huacheng, Ryan Fox, an industry analyst, said that the North American companies producing corrugated boxes closed nearly 1 million tons of production capacity in the third quarter, and it is expected that a similar situation will occur in the fourth quarter. At the same time, the price of cardboard fell for the first time since the outbreak of the epidemic in 2020.

"The severe decline in global carton demand shows that many areas of the global economy are weak. Recent historical experience shows that a large amount of economic stimulus is needed to revive carton demand, but we do not think this will happen," said KeyBanc analyst Adam Josephson.

Although cardboard/box seems insignificant, it can appear in almost every link of the commodity supply chain, which makes this packaging product a key barometer to measure the economic situation.

According to the Huacheng Import and Export Data Observation Report, at present, global investors are paying close attention to any omen of the future economic situation, because people are increasingly worried that many large economies in the world will fall into recession next year. At present, the information fed back by the cardboard/carton market is obviously not optimistic

High inflation hits consumer demand, and packaging giants cut production in succession

At present, WestRock and Packaging, the leading enterprises in the American packaging industry, have announced that they have closed their factories or left their equipment idle.

According to the Huacheng Import and Export Data Observation Report, Cristiano Teixeira, CEO of Klabin, Brazil's largest exporter of packaging paper, also said that the company was considering cutting exports by as much as 200000 tons next year, which was almost half of the total exports in the rolling 12 months up to September.

The main reason for the decline in demand is that high inflation has increasingly hit consumers' wallets. Companies that produce a variety of products, from consumer necessities to clothing, have been prepared for the downturn in sales. P&G has previously raised the prices of products from Pampers diapers to Tide laundry detergent several times to offset the impact of rising expenditure, which led to the first quarterly sales decline since 2016 earlier this year.

In addition, although American retailers offered a large discount on Black Friday, hoping to clear the excess inventory, the retail sales data of the United States in November still recorded the largest decline in nearly a year. The rapid growth of e-commerce, which is keen on using cardboard/boxes, has also faded, Huacheng Import and Export Data Observation reported.

The demand for pulp in Europe has declined, while the demand for pulp in China has not yet recovered

The sluggish demand for cartons has also hit the pulp industry, the raw material for paper making.

Suzano, the world's largest pulp producer and exporter, recently announced that the price of its eucalyptus pulp in China will be lowered, which is the first time since the end of 2021.

Gabriel Fernandez Azzato, director of TTOBMA, a consulting company, pointed out that the demand in Europe is declining, while the long-awaited recovery of pulp demand in China has not yet been realized. Huacheng Import and Export Data Observation reported.