Forced to remove 1.8 million tons of capacity per year in declining graphic papers markets, North American producers see containerboard as the most feasible machine conversion option
North American graphic paper producers continue to struggle with overcapacity in a declining market that has experienced a 48% drop in demand since the turn of the century. This has forced producers to remove 1.8 million tons of capacity per year between 2001-2014 just to keep pace. Consequently, mills looking to avoid the closure of productive assets have been driven to consider converting machines for packaging and specialty papers production. These trends and other findings were revealed in the North American Containerboard Conversion Study, by RISI, the leading information provider for the global forest products industry.
"Out of all alternative grades, containerboard stands out as the most attractive conversion option for graphic paper producers because of similar basis weights and its high volume commodity nature. The market has positive demand growth and higher profitability, but presents key challenges alongside these opportunities for producers looking to convert," said Derek Mahlburg, lead study author and Senior Economist of Graphic Paper at RISI.
"As producers assess conversion feasibility and transition to new grades, significant changes will take place in packaging papers markets. These will impact supply, pricing, and the competitive landscape," continued Mahlburg.
The North American Containerboard Conversion Study is a comprehensive analysis outlining the opportunities and challenges faced by graphic paper producers looking to convert. It reviews the success of previous machine conversions while identifying and analyzing top candidates for future conversion. In addition, the study forecasts to 2019 to determine how markets will respond.
The Study details:
The impact conversions will have on the competitive landscape, market balance and sources of supply in virgin and recycled containerboard markets
Cost estimates of top conversion candidates as containerboard producers based on RISI's cost benchmarking service
Traits that make a machine a feasible conversion candidate
The potential for the containerboard market to absorb new capacity
Current state of the market and analysis of risk associated with mill investment
Alternative, non-containerboard grades that graphic paper producers might also consider
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