Demand Slump (CONT’D FROM PAGE 10)
“Compared with the total nondurables industrial pro- duction index or even the index for consumer goods ex- cluding energy, inflation-adjusted nondurable manufac- turers’ sales (excluding energy goods and the chemicals sector) corresponds much more closely with the extended weakness of box shipments over the past three years. “In March, this alternative view of the nondurables sec- tor recovered after declining in February. “With consumer sentiment deteriorating even further in April, we expect box shipments to extend their very weak performance into the early weeks of the second quarter before beginning to recover. “US containerboard prices were unsurprisingly flat in May, with the market in a holding pattern amid the explo- sion of uncertainty. In February, most US containerboard prices rose $40 per ton, while 42-lb. white-top liner prices rose $30 per ton. “As with the 2022 price increase that was driven by rapid cost inflation and implemented just before the steep downward turn of demand became clear, the February 2025 price increase barely beat the eruption of tariff-driv- en uncertainty and sentiment plunge that would have made it much more difficult to achieve any upward price movement. “Due to the deterioration of the economic and demand outlooks, last month’s price forecast for the remainder of 2025 shifted to a modest price decline emerging in the
tariff increases of 30 percent on China and 10 percent on most other countries (excluding USMCA-compliant goods) will mostly remain in place at current levels, though the status of tariffs continues to develop rapidly. “For the containerboard outlook, the change in the economic forecast has narrowed the projected loss for US corrugated box shipments in 2025 to 1.9 percent and the loss for production to 3.7 percent compared with a 4.8 per- cent production decline in last month’s forecast. “Box shipments slumped in first quarter and are expect- ed to slide in 2025. US corrugated box shipments sank 2.1 percent in the first quarter on a non-seasonally adjusted basis according to the latest statistics from the Fibre Box Association (FBA), a discouraging performance that came despite stability in the US manufacturing sector and for consumer spending. “Due to the strong growth for spending in the second half of 2024, the downward revision to consumer spend- ing in the second of the BEA’s three first-quarter GDP esti- mates still left the year-over-year growth for real personal consumption of goods (excluding autos and energy) at 3.5 percent. “Last month, we highlighted the difference between long-term trends for various aggregates of nondurables industrial production, the traditional bellwether for under- lying corrugated demand from manufacturers.
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July 7, 2025
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