MARKET ANALYSIS
Consumption down as
recessionary times loom
Lower demand within slower economies over
the past two quarters is expected to continue
into 2023. While some factors have improved,
such as better freight rates, nothing is moving
the needle in a big way.
96
Most in the US paper sector expect the
slow market seen during the fourth
quarter of 2022 and the first quarter of
2023 to continue, with the ‘soft’ mar-
ket lasting much longer than it normal-
ly does at times of weak markets and
downturns.
An uptick in USA domestic demand at
paper mills is simply not enough to
make a significant change in demand.
Paper mills are cutting back orders on
recovered fibre for one of three rea-
sons: a slowdown in orders from their
customers; full inventories after taking
advantage of softer markets earlier this
year; or additional downtime over the
coming weeks. While these closures
mostly happen at containerboard mills,
it is also occurring at tissue mills. In
the past, if the economy was soft and
box demand was low, tissue mills
would mostly be immune to these
slowdowns. Not this time, however, as
tissue mills are also taking downtime.
In some cases, mill operators have
decided to shut mills permanently. The
most recent announcements have been
from Sonoco, which is closing a mill in
Kansas, and Pactiv/Evergreen which is
shuttering a mill in North Carolina.
LOWER TONNAGES
Almost across the entire US, MRFs are
stating that inbound tonnages are
down compared to last year by any-
where between 15% and 40%. In some
cases, this reduced supply has kept
prices propped up a little. Buyers of
old newspapers, for example, have had
to bid up the pricing to get the few
tonnes that are available. The econom-
ic slowdown is also significantly lower-
ing demand for virgin pulp, which is
important because there is some rela-
tionship between pulp and recovered
fibre demand, especially for ‘swing’
mills that can lower the proportion of
recovered fibre for feedstock in favour
for virgin pulp. Pulp pricing continues
to erode worldwide as inventories con-
tinue to swell. Some pulp grades have
dropped US$ 100 per tonne in just a
few weeks. Activity on the west coast is
not quite as bleak as there are still
export orders.
Ocean rates have come down again as
the container lines look for business
but, as imports continue to fall, there
will be fewer ships heading to export
markets and this could easily result in
some higher pricing for containers. It
seems the prediction of a pending
recession is gaining more steam.
PACKAGING DECLINE
In Europe, the return to something like
normal after the pandemic has reduced
A U T H O R Robin Latchem
96-97_mapaper.indd 96 03-05-2023 17:08
