Implications for Containerboard Producers . Lightweight Containerboard. Sarilee Norton. July 2011. Containerboard Market Share by Company. Interstate Resources. Atlantic Packaging. 1.0-1.5% each. KapStone Kraft. Simpson Paper. Corrugated Services. Sonoco Products. US Corrugated.
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Implications for Containerboard Producers
Less Fiber, More Sustainable, Less Cost?
The Logic of Lightweights
SOURCE: Future of Lightweight Containerboard in North America, 2010
A relentless focus on reducing costs
An ‘holistic’ approach to packaging in the retail environment, integrating:
SOURCE: Institute of Grocery Distribution Report, 2007
“One of the most interesting technological developments over the past few years has been the development and use of lighter weight liners and flutings. Improved papermaking technologies have ensured that the overall structural properties of the corrugated container can be maintained…to produce economic and environmental benefits.”
SOURCE: Wal-Mart Retail Ready Packaging Guidelines
Back to the Future?
RISI Capacity Forecast
SOURCE: RISI, Norton Associates
We believe efforts to keep operating rates looking favorable have run out of momentum in the face of sluggish box shipments and at best, uncertain economic conditions. We don’t see much to indicate that the remainder of 2011 will be a better environment for operating rates, unless there is another round of capacity rationalization.
Still Struggling to Recover Volume
Box Plant Activity
Since 2008 box plant shipments have yet to get close to the ‘magic’ 7.5 BSF average week benchmark. RISI notes that if the first quarter rate of growth is annualized, it would translate to 5+% for the balance of 2011. However, if key economic indicator forecasts become stagnant, we think 2011 will be no better than 1.5-2.5% growth.
It Makes Good Sense for THEM
Norampac’s New Machine
Percentages based on 2010 data from Niagara County Industrial Development Agency, project total cost estimate of $407.5 million
A Point of View
What Does It All Mean
…But Not Box Shipments
…But What’s Happened Since 2008?
…That Prices Can’t Be Sustained