Can a small cardboard box warn the global economy? The blaring alarm may have sounded
Across the world, factories that make cardboard are cutting output, perhaps the latest worrying sign of a slowdown in global trade.
Industry analyst Ryan Fox said North American companies that produce the raw material for corrugated boxes shut nearly 1 million tons of capacity in the third quarter, and a similar situation is expected in the fourth quarter. At the same time, cardboard prices fell for the first time since the outbreak of the epidemic in 2020. chocolate box
“The severe decline in global carton demand is indicative of weakness in many areas of the global economy. Recent history suggests that reviving carton demand would require substantial economic stimulus, but we do not believe that will be the case,” KeyBanc Analyst Adam Josephson said.
Despite their seemingly inconspicuous appearance, cardboard boxes can be found in nearly every link in the commodity supply chain, making global demand for them a key barometer of the state of the economy.
Investors are now closely watching for any signs of future economic conditions amid growing fears that many of the world’s largest economies will slip into recession next year. And the current feedback from the cardboard market is obviously not optimistic… cookie box
Global demand for packaging paper has weakened for the first time since 2020, when economies recovered after the initial blow from the pandemic. U.S. packaging paper prices fell in November for the first time in two years, while shipments from the world’s largest packaging paper exporter overseas fell 21% in October from a year earlier.
Depression warning?
At present, WestRock and Packaging, the leading companies in the US packaging industry, have announced the closure of factories or idle equipment.
Cristiano Teixeira, chief executive of Klabin, Brazil’s largest packaging paper exporter, also said the company was considering cutting exports by as much as 200,000 tonnes next year, almost half of exports for the rolling 12 months to September.cookie box
The drop in demand is largely due to high inflation hitting consumer wallets harder and harder. Companies that make everything from consumer staples to apparel have braced for weaker sales. Procter & Gamble has repeatedly raised prices on products ranging from Pampers diapers to Tide laundry detergent to offset higher spending, leading to the company’s first quarterly decline in sales since 2016 earlier this year.
Also, U.S. retail sales posted their biggest drop in nearly a year in November, even as U.S. retailers discounted heavily on Black Friday in hopes of clearing excess inventory. The rapid growth of e-commerce, which favored the use of cardboard boxes, has also faded. Chocolate box
Pulp also encounters cold current
The sluggish demand for cartons has also hit the pulp industry, the raw material for papermaking.
Suzano, the world’s largest pulp producer and exporter, recently announced that the selling price of its eucalyptus pulp in China will be reduced for the first time since the end of 2021.
Gabriel Fernandez Azzato, director of consulting firm TTOBMA, pointed out that demand in Europe is falling, while China’s long-awaited recovery in pulp demand has not yet materialized.
Post time: Dec-27-2022
