EMGE asked last month whether May’s growth in cartonboard demand was retailers over-ordering ahead of the football World Cup. June gives two different answers depending on the region.
In Western Europe the answer looks like yes. Apparent demand for cartonboard fell 8% in June, following an above-trend May, even though European teams did well in the tournament. Consumption of the goods packaged in cartonboard does not appear to have matched what was ordered for them. Spain, France and England all reached the semi-finals in July, so there may be more to come in the next set of numbers.
North America went the other way, with apparent demand above trend again in June at plus 3%. Canada and the United States were two of the three World Cup hosts, and price rises announced for July may have pulled some buying forward into June as well.
China, Japan and South Korea posted a second straight month of 14% growth, following the restart of 1.2 million tonnes a year of virgin fiber cartonboard capacity by Shandong Chenming. EMGE suspects some of that apparent demand is still sitting in warehouses rather than being consumed, and notes that Asian prices for virgin fiber cartonboard fell in August. Three-month average operating ratios for June ran at 84% in Western Europe, 83% in North America, 81% across China, Japan and Korea, and 74% in the rest of the world.
Containerboard tells a similar regional story with a different cause. Global demand grew around 2% in June, with every region growing except Western Europe. European production actually rose while demand fell, which EMGE attributes to exports into markets affected by the closure of the Strait of Hormuz. In Asia the drag came from capacity rather than demand: multiple new machines started up in China in May and June, so even with demand and production both growing solidly, operating ratios fell. Because that region dominates the global containerboard market, it pulled the global average down with it. Vesper’s paper packaging analysis carries the full regional series behind these numbers.
