Challenges corrugation industry is facing

According to a report by Smithers, the global corrugated board industry will face challenges and notice a shift in market dynamics in the upcoming five years.

10 May 2024 | By Disha Chakraborty

Smither’s in-depth analysis of capacity changes, pulp pricing, and end user demands shows that in 2023, global containerboard production was 183.4-million metric tons, a -4% decline in 2022. These were converted into around 165 million tons of corrugated board, a decrease of more than -7% in 2022;  with value reaching USD 224.4-billion. This reflects the end of the period of  disruption in world supply that began in 2020 with Covid-19, which was  characterised by disruption to global logistics impacting demand, price  fluctuations leading to high inventories, and subsequent destocking. 

Smithers is now able to forecast slight growth across 2024, with value increasing  to USD 231.7-billion. This will be followed by a broader recovery in world demand  at an average annual growth (AGR) of +2.5% by volume. This will see world  corrugated volumes reach 190-million tons in 2029; value in the market will  increase at a +3.7% AGR to USD 277.6-billion, at constant prices. 

Many major containerboard suppliers have already invested in increased  capacity, which will manifest in low operating rates across much of the Smithers  forecast period. This is prompting moves that will redraw the commercial  landscape for corrugated, with four of the six largest converters worldwide –  Smurfit Kappa/WestRock (Sept 2023); DS Smith/International Paper (April 2024)  – pursuing multi-billion-dollar mergers. Other firms are rationalising operations;  delaying further investment, taking extra downtime or even closing older mills and box plants.  

Across 2024-2029, demand for corrugated packaging will vary across the 13  different end-use sectors. The packaging and transportation of  food products accounted for over 46% of the consumption of corrugated  packaging material during 2023, a relatively constant level since 2016, but is  expected to change slightly to 47% by 2029. This will include a new surge for  corrugated grades for processed foods, although growth in fresh food and  produce will be slower, and electrical goods are expected to have the most  attractive volume growth of all products.  

Multiple opportunities are arising for corrugated materials. Their recyclability  means they are increasingly being favored by brands and legislators, not just in  transit, but consumer-facing primary packs. This is pushing converters towards  finer, premium flute grades that can compete with folding cartons in sectors  such as cosmetics, confectionery, and consumer electronics. 

Legislation such as the EU’s recently approved Packaging and Packaging Waste  Regulation (PPWR) are opening other opportunities. The PPWR will ban certain  single-use plastic formats by 2030, including for smaller volume produce packs, and collation films for multipack beverages and food. Similar potential exists in food-service applications, is effective non-PFAS oil and grease resistance coatings can be integrated into existing corrugated lines.  
Sales of retail-ready packaging (RRP) boxes are also forecast to increase rapidly due to the increased popularity of budget grocery chains in developed markets, and growth of retail infrastructure across Asia. In some instances converters will benefit from the installation of a new generation of high throughput inkjet presses for corrugated board, producing higher quality customised RRP.  

The same equipment can be used to capitalise on the ongoing rise in e-commerce shippers. Twinned with design innovations these can produce  visually appealing, consumer-oriented boxes that enhance branding and offer superior consumer returns. 

The future of corrugated board packaging to 2029 from Smithers, combines  expert market, commercial, and technical analysis to produce highly detailed market forecasts. Its comprehensive data set of over 350 tables and figures  quantifies capacity, supply, and demand for both containerboard and converted corrugated board, by both value and volume. This is segmented by corrugated board grade; end-user application and geographic region and national market. 

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