The results are found in PPC’s ‘Trends: 2015 Industry Outlook and Market Data’ report, an analysis of the North American folding carton industry, by RISI.
US carton shipments to grow to $9.5bn by 2019
It predicts the folding carton market is expected to grow 0.5% through 2019, and the total value of US carton shipments will climb to $9.5bn over the same period.
It claims the dry foods market will experience steady growth as consumers buy more healthy, yet expensive products (e.g. gluten-free, whole wheat, organic) as well as more frozen fruit, caused by an increased interest in smoothies and homemade juices.
However, as a growing number of health-conscious consumers look for fresher, more nutritious alternatives, sugary drinks and the frozen foods market will not fare as well.
Ben Markens, president, PPC, said the report delves deep into developments in consumer buying habits and market trends and carton shipments will grow a modest 0.4% in 2016.
“The outlook is expected to improve toward the latter half of the five-year horizon, leading to average annual shipment growth of 0.5% between 2015 and 2019,” the report states.
“Meanwhile, the total value of US carton shipments should climb from an estimated $8.9bn in 2014 to $9.5bn in 2019, and average values per ton are expected to increase 0.8% annually over the forecast horizon.
“The macroeconomic environment appears strong for folding carton producers, but technological and industry-related factors will place further pressures on converters.
“Overseas competition will continue to challenge producers over the next five years, especially given the strengthening of the US dollar relative to most global currencies.
“In addition, competition from alternative packaging methods and materials is expected to remain in place, especially with low priced oil aiding plastic manufacturing costs.
“On the flip side, recent environmental initiatives by some of the largest fast food companies and municipalities across the country could prompt increased use of paperboard packaging.”
Boxboard prices to fall with increased capacity from China
Boxboard prices - which have been increasing over recent years - will begin to fall as increased coated cartonboard capacity from China continues to spill over into the global marketplace.
Bleached board prices will also be undermined when substantial boxboard tonnage comes online from Europe next year.
“Still one of the biggest drags on the folding carton market has been increasing boxboard prices,” the report adds.
“From 2010 to 2014, paperboard costs rose at an average rate of 3.8%, whereas the average values of folding cartons only increased by 1.8%. This disparity between boxboard prices and folding carton values has put significant pressure on profitability, thus increasing substitution pressure from other packaging substrates.
“There appears to be some hope on the horizon, however. Upward pressure is expected to break as increased coated cartonboard capacity from China continues to spill over into the global market place.
“Additionally, substantial boxboard tonnage is slated to come online from Europe next year. This increase in boxboard capacity will eventually spill over into the US market, undermining bleached board prices.”