February focus: Price hikes and supply chain cost inflation
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Welcome to the inaugural 2025 edition of Fastmarkets Forest Focus! We bring you a comprehensive overview of the latest trends, insights and developments shaping the forest products market. Our goal is to keep you informed and ahead in this dynamic landscape. From the key movements in pulp and paper packaging to crucial updates in containerboard and wood products, we unpack the major factors driving these global markets. With our insights, you can better prepare to navigate the risks and seize the opportunities ahead.
In February, we explore the price increases in North American paper packaging and containerboard markets and examine the cost inflation across the Latin American paper products supply chain.
Inside, you will find:
Margins driving paper packaging price increases in North America
For the second November in a row, Packaging Corporation of America (PCA) announced a?containerboard price increase followed by producers?controlling a large majority of US containerboard capacity. All five top US containerboard producers have announced a January price increase of $60-70 per ton for linerboard.
For the North American?paper packaging market, this price increase alongside a range of macroeconomic factors has left industry players uncertain about the future.
Read our North American paper packaging outlook to access:
Demand has lagged in the North American economy since 2022, resulting in uncertain recovery potential in the typically stable US?containerboard?and corrugated market.
Export growth helped operating rates climb in 2024, but there are still significant risks in the industry. Exports play an important role for many US containerboard producers, including as a release valve for overcapacity when domestic market conditions are slow. Weak global demand conditions and rising supply made it difficult for North American mills to place export tonnage for much of 2022-23.
US offshore exports of kraftliner began to rebound strongly in the second quarter of 2023, climbing to more than 50% above year-ago levels by the end of the year. Disruptions to global trade, such as the Red Sea crisis, helped US exports return to peak levels despite severe global oversupply. Since peaking in April 2024, US containerboard exports have cooled, succumbing to globally weak demand.
Read the full outlook on the North American paper packaging market, including the reasons behind price increases and the impact of changes to trade and tariffs.
This outlook comes to you from our expert team: Derek Mahlburg, Steven Honeyman, Beth Lis and Lasse Sinikallas.
Everything you need to know about the US containerboard price increases
All five of the top US?containerboard?and corrugated producers have announced a January?price?increase of $60-70 per ton for linerboard, which we expect to find substantial traction despite market conditions that remained soft through the third quarter of 2024.
With overall demand still weak and operating rates still tepid, we view the announced price increase as driven primarily by producers’ focus on margin improvement — similar to the cost-driven price rises that occurred in 2024 but without the upward pressure from old corrugated container (OCC) costs, which continued to slide in December.
The January price increase proposal thus represents an important test for producers’ ability to raise prices, which fell behind the pace of overall inflation in 2023, in the absence of traditionally supportive market conditions. After?the $60-per-ton January increase projected in the baseline forecast, we expect prices to stabilize over the rest of 2025.
What’s next for US containerboard?
We expect operating rates to gradually rise in 2025, with demand and supply re-balanced by some combination of a more robust demand recovery and further capacity rationalization, setting the stage for another price increase in early 2026. After 7% per year average price increases in 2025 and 2026, we expect the pace of containerboard pricing gains to decelerate to the pace of overall inflation.
The fluid US tariff situation presents ambiguous risks for the US containerboard and corrugated market, with wide-ranging potential consequences for domestic industry, exports, recycled fiber and the availability of select grades.
Read the full article and learn about US containerboard price increases and how they will impact the market.
Cost inflation weakens across Latin American paper products supply chain
Domestic?pulp?and?paper?production indices across Latin America are showing significant signs of volatility on the demand side, only partially reflecting the demand recovery for the packaging market.
Packaging demand was stronger in 2024 compared to 2023, as major fruit exporters had entered the market to secure volumes before exporting their crops. Solid domestic retail sales have also boosted consumption of?boxboard?grades.
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OCC?imports across Latin America resumed in July and August amid the stronger demand but are expected to slow again as converters and paper producers have secured most of the volumes needed to export fruit crops in the third and fourth quarters.
The?tissue?market, assessed by imports, is also recovering from a weak 2023 as imports are increasing widely across the region.
Prices assessed by Fastmarkets?continued to increase in the third quarter, reflecting the higher cost inflation across the pulp and paper supply chains and higher export and import parities given the general weakening of local currencies versus the US dollar, as we have expected since the start of the year.
We?anticipate prices will continue climbing in the coming months, affecting all buyers across the value chain.
However, local industrial and producer price indices in Latin America (either assessing production costs for pulp and paper producers or costs of pulp and paper products as raw materials for manufacturers) shifted their upward trend and started to flatline or even decline in some cases (as is the case in Chile) amid high domestic inventories of those products, which could signal a looser scenario for prices ahead.
The announcement of small price declines from major Brazilian pulp producers for the fourth quarter also contributed to the market sentiment that the paper price forecast might be revised down, as cost inflation pressure seems to have been easing across the supply chain.
Click here to access our data story, including visualizations on production levels and price indices across major Latin American markets.
Brazil: Economic performance stronger than projected, raising inflation and expectations
Retail sales in Brazil increased by 2.1% YoY in September, mainly driven by the solid economic activity in the domestic market and some marginal improvements in the credit conditions, as overall debt levels declined in the third quarter from the second quarter, although they are still historically high.
Industrial production expanded 3.4% YoY in September, the fourth monthly increase in a row, following the overall positive economic environment in the country, given the growth in the BCB’s monthly economic activity index (IBC-Br) since April.
Brazil’s inflation rate accelerated to 0.6% in October from 0.4% in September. This increase was primarily attributed to rising prices in housing and food, particularly a significant hike in electricity tariffs, which impacted overall living costs. Food prices also saw notable increases due to supply constraints and higher export demand thanks to a weakening in the Brazilian Real versus the US dollar in October since the beginning of the year.
Access the full analysis on the macroeconomic factors impacting the Latin American paper products supply chain by Rafael Barisauskas.
Get a sample of the Fastmarkets Paper Packaging Monitor
Fastmarkets’ Paper Packaging Monitor provides an overview of the current market conditions as well as a short-term outlook for the North American paper packaging market, enabling you to anticipate market fluctuations and make strategic moves that significantly impact your business.
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Start tracking and forecasting key market trends and prices for North American paper packaging markets.
Our upcoming forest products events
Fastmarkets Forest Products Europe Conference 2025 (March 3-5, 2025, Lisbon) brings together 300+ industry leaders to tackle change in uncertain times. Gain key insights into circularity, regulations, market trends, decarbonization, innovation and shipping. Network, exchange ideas and help shape a sustainable future for Europe’s pulp, paper and packaging industry.
We look forward to sharing more forest products market updates and industry insights in the coming months.
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Until next month!
Fastmarkets forest products team