Paper capacity, production declines, but slight growth predicted in ’24

The Washington-based American Forest & Paper Association (AF&PA) has released its 64th annual “Paper Industry Capacity and Fiber Consumption Survey.” It reveals a decline in overall paper and paperboard capacity in the U.S. for the sixth straight year, while paper and paperboard production also shrunk for the second year in a row.

In 2023, U.S. paper and paperboard capacity declined by 1.6 percent—the biggest slump since 2020, when capacity also declined 1.6 percent. The AF&PA says paper and paperboard capacities have decreased annually since 2018.

Paper and paperboard production, however, saw the most noticeable decline last year. The AF&PA reports that U.S. paper and paperboard production fell by 7.2 percent in 2023, with declines in all categories except tissue.

”Smithers is now able to forecast slight growth across 2024, with value increasing to $231.7 billion. This will be followed by broader recovery in world demand at an average annual growth of +2.5 percent by volume.” – “The Future of Global Corrugated Packaging to 2029,” Smithers

In last year’s survey, the organization reported an overall 3.3 percent decrease in production in 2022, with some grades faring better than others as boxboard production increased and tissue remained essentially flat.

Several major mill openings and/or conversions began operating last year, totaling 2.1 million tons of 100 percent-recycled paper capacity, according to the AF&PA, including Domtar’s conversion to recycled packaging grades at its mill in Kingsport, Tennessee; Cascades’ opening of a recycled containerboard mill in Ashland, Virginia; and Pratt Industries’ opening of a recycled paper mill and box plant in Henderson, Kentucky.

However, the report notes more than 1.7 million tons of mostly virgin wood fiber capacity were permanently removed last year.

Containerboard capacity reached a record high of 42.3 million tons in 2021 after increasing 11 consecutive years, expanding at its fastest rate in 25 years. It also exceeded 50 percent of total paper and paperboard capacity for the first time that year.

But U.S. containerboard capacity declined slightly in 2023, marking back-to-back decreases as it fell 0.7 percent last year and 0.6 percent in 2022. The AF&PA notes, however, that containerboard capacity remains at near-record levels because of that 11-year growth streak averaging about 1.6 percent.

Akron, Ohio-based consulting and information services provider Smithers also released a report in mid-May examining trends in global containerboard and corrugated packaging demand, and the decline in U.S. paper and paperboard production is in line with the organization’s findings.

Smithers says an in-depth analysis of capacity changes, pulp pricing and end-user demands reveal global containerboard production reached 183.4 million metric tons in 2023, a 4 percent decline compared with 2022. This was converted into about 165 million tons of corrugated board, a more than 7 percent decrease compared with 2022, Smithers says.

But the report says this should reflect the end of “the period of disruption” spurred on by the COVID-19 pandemic.

“Smithers is now able to forecast slight growth across 2024, with value increasing to $231.7 billion,” the report continues. “This will be followed by broader recovery in world demand at an average annual growth of +2.5 percent by volume.”

This trend follows figures released by the AF&PA in late April showing U.S. containerboard production increased in the first quarter of 2024 compared with the same period in 2023, marking back-to-back quarterly increases.

Containerboard production decreased through 2022 and into 2023 before picking up later that year, contributing to the overall production decline. But in the fourth quarter of 2023, U.S. containerboard production was up 12 percent compared with the fourth quarter of 2022 and up 7 percent in the first quarter of 2024, possibly signaling the expected growth Smithers forecasts.