Research
Interview Synopsis

North American paper packaging – industry outlook

  • Multi Asset
  • Materials
  • Europe

Demand for paper packaging in North America has been robust in many areas across the sector but flimsy in others, due in part to the knock-on impacts of COVID-19. Third Bridge Forum spoke to a former director at Graphic Packaging International Corp to explore supply and demand dynamics across the main grades of paper: printing and writing, newsprint, tissue, and packaging.

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Effects of COVID-19 rip through US paper packaging sector

The expert considered the areas in which the major industry players have the most exposure, and the potential winners and losers in light of recent volatility. Names that came up in the weaker category included Resolute, Verso and Domtar, which have deep printing and writing footprints. On the tissue side, where demand has been strong, Georgia-Pacific, Procter & Gamble and Clearwater were highlighted as significant players. For containerboard, International Paper, WestRock, GP and PCA are all “very solid”.

Corrugated packaging has enjoyed a boost from e-commerce growth in recent years and demand for the material “should hold up”. However, China has been reducing how much waste paper it imports from the US, and this has ramifications for containerboard pricing, the specialist said. “Without more demand outside the US for our recovered fibre, corrugated is going to have a hard time keeping prices up.”

Another topic was whether the pandemic and recent volatility will catalyse further consolidation in the sector. Acquisition targets might include the aforementioned Resolute, Domtar and Verso. However, as they operate in grades of paper that are recording declining sales, it is difficult to understand what the strategic rationale of a potential buyer might be.

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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