Demand Slump, Tariffs Shape 2025 Containerboard Market Outlook BY DEREK MAHLBURG, BETH LIS, STEVEN HONEYMAN, AND LASSE SINIKALLAS Fastmarkets released its latest analysis focused on con- tainerboard prices showing a mix of cost relief, demand fluctuations, and capacity changes affecting the North America paper packaging industry in coming years. “Prices are expected to see a modest decline during the second half of 2025, influenced by weak demand. However, capacity rationalization and eventual demand recovery in 2026 could lead to a rebound, potentially tightening market conditions by 2027. Recent reductions in US-China tariffs improved the economic outlook slight- ly. However, ongoing tariff risks and weak manufacturing
activity pose persistent headwinds for box shipments and production. “We expect cost relief and weak demand to cause a modest decline in US containerboard prices in late 2025. Capacity rationalization and demand recovery may drive a price rebound in 2026 and potential market tightness by 2027. “Some cost relief appeared in April due to lower nat- ural gas prices, with further progress likely in May. OCC prices have also decreased, adding to the cost relief in early 2025. “This month’s forecast for containerboard demand in 2025 is slightly less pessimistic due to the ratcheting down of US-China tariffs in mid-May; however, tariff-related risks remain extremely high, and discouraging May manufactur- ing surveys have cemented our view that the increased tariffs and uncertainty of 2025 will ultimately prove head- winds for corrugated demand.
“We expect box shipments to sink 1.9 percent in 2025 before recovering 2.2 percent in 2026 and returning to a typical growth rate of 1.0 percent to 1.5 percent in 2027. “GP’s announcement of the Cedar Springs closure matches last month’s as- sumption that more than 1.0 million tons of additional closures would be announced for 2025, so the overall baseline capacity outlook is little changed, though the pro- jected rationalization has been de-risked and condensed into the third quarter. “Despite the more than 2.0 million tons of net closures in 2025, we do not expect operating rates to regain the 94 percent threshold until 2026 due to headwinds from exports and inventories that will com- pound the negative demand outlook for 2025. In 2027, operating rates could sur- pass 95 percent or even 96 percent if the next round of capacity investment does not materialize, with tightening market conditions being the main driver of that year’s projected upward price movement rather than the cost and margin dynamics of 2024-25. “How are tariffs impacting the market? This month’s outlook incorporates the re- duction in tariff levels between the US and China that occurred in mid-May, resulting in a slightly stronger US economic outlook. Although we still expect tariffs and uncer- tainty to be a drag on US economic growth, the baseline economic outlook no longer includes an outright recession in 2025. “Our baseline forecast effectively as- sumes that the incremental broad 2025 CONTINUED ON PAGE 12
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July 7, 2025
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