AF&PA report shows decline in paper, board capacity in '23

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

In 2023, overall U.S. paper and paperboard capacity declined by 1.6 percent—the biggest slump since 2020 when capacity also declined 1.6 percent—and, according to the AF&PA, has decreased every year since 2018.

It was paper and paperboard production, however, that 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. In last year’s report, 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 operations last year, totaling 2.1 million tons of 100 percent recycled paper capacity, according to the AF&PA. Mills include: Domtar’s conversion to recycled packaging grades at its mill in Kingsport, Tennessee; Cascades’ opening of its recycled containerboard mill in Ashland, Virginia; and Pratt Industries’ opening of a recycled paper mill and corrugated box factory in Henderson, Kentucky.

However, the report notes that more than 1.7 million tons of mostly virgin wood fiber capacity was permanently removed last year as “the industry faced demand weakness from customer destocking and economic headwinds,” the AF&PA says.

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, and had exceeded 50 percent of total paper and paperboard capacity for the first time.

But U.S. containerboard capacity declined slightly in 2023, marking the second-straight decrease as it fell 0.7 percent last year and 0.6 percent in 2022. The AF&PA says, however, that containerboard capacity remains at near-record levels because of that 11-year growth streak averaging about 1.6 percent from 2011 to 2021.

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

The report says, however, that this should reflect the end of “the period of disruption” spurred on by the COVID-19 pandemic in 2020, “which was characterized by disruption to global logistics impacting demand, price fluctuations leading to high inventories and subsequent destocking.”

“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 is pushing converters towards finer, premium flute grades that can compete with folding cartons in sectors such as cosmetics, confectionery and consumer electronics.”

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

Containerboard production had decreased through the end of 2022 and much of 2023 before picking up later that year, undoubtedly leading to the overall decline in production last year. But in the fourth quarter of 2023, containerboard production in the U.S. was up 12 percent compared with the fourth quarter of 2022, and was up 7 percent in the first quarter of this year, possibly signaling the expected growth Smithers forecasts for this year.

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