Factories churning out cartonboard are cutting output around the world, a worrying sign that global trade is slowing.
North American companies that make the raw material for corrugated boxes shut down nearly a million tons of capacity in the third quarter, and a similar scenario is expected in the fourth quarter, Bloomberg Intelligence analyst Ryan Fox said.
Prices are falling for the first time since 2020.
“The sharp weakness in global demand for boxes is an indication of how weak many parts of the world economy are,” said Adam Josephson, analyst at KeyBanc.
“Recent history shows that it would take a significant amount of economic stimulus to create appreciable demand for boxes, and we don’t see that coming.”
Investors are keeping an eye out for possible harbingers of what’s to come as fears mount that many of the world’s largest economies will slide into recession next year. Paper boxes are present at almost every step of a commodity’s journey through the supply chain, making paper a key indicator of how economies are faring.
The signals are not encouraging.
Global demand for packaging paper is showing weakness for the first time since 2020, when the economy regained momentum after the first outbreak of the Covid-19 pandemic. US prices fell in November for the first time in two years, and the US, the world’s largest exporter, reported 21 percent lower volumes shipped overseas in October from a year earlier.
WestRock and Packaging Corp have announced factory closures or idled machines.
Brazil’s largest packaging paper exporter is considering reducing its exports by up to 200,000 tons next year, according to Chief Executive Officer Cristiano Teixeira.
That’s almost half of its exports.
https://www.independent.ie/business/world/reduction-in-cardboard-production-points-to-wider-global-economic-slowdown-42239608.html The reduction in cartonboard production points to a broader global economic slowdown