Source:Oriental Fortune
China’s paper industry products can be divided into “paper products” and “cardboard products” according to their usage. Paper products include newsprint, wrapping paper, household paper and so on. Cardboard products include corrugate box board and FBB folding box board
As an important part of the packaging industry, the corrugated paper box market plays a key role in China’s economic development. With the steady growth of China packaging industry and the gradual rise in demand for paper products by 2023, the cardboard box market shows promising growth prospects.
Compared with other leading indicators of U.S. economic growth, such as the Chamber of Commerce’s Leading Economic Activity Indicators, non-manufacturing PMI, unemployment rate, inverted yield curve, the indicative role of cardboard box demand on the recession is more likely to be ignored, but this does not affect its value in the experts and scholars to determine the point of the economy into a recession for reference.
Cardboard box recession, its definition is the demand for paper cardboard prodcts for several consecutive quarters of contraction. Throughout the U.S. economy in recent recessions, “Cardboard Box Recession” phenomenon almost always in the economy into a recession before the first “red light”.
The third largest U.S. cardboard box producer Packaging Corp of America (Packaging Corp of America) announced this week, following a 12.7% decline in the first quarter, the largest decline on record, after the second quarter Corrugated Cardboard sales fell 9.8% year-on-year. According to data compiled by FreightWaves Research, a supply chain intelligence company, the U.S. Packaging Corp of America in the last two quarters of the cumulative decline in cardboard box sales hit its biggest since early 2009.
The Federal Reserve’s rapid interest rate hikes have dampened demand for cardboard boxes, and demand may be entering a prolonged downturn. On the 26th local time, as widely expected by the market, the Fed raised its benchmark interest rate target by 25 basis points to a 22-year high of 5.25%-5.5% at its July rate meeting. So far, since March 2022 to open the current round of interest rate hikes since the process, the Fed raised interest rates a total of 11 times, the fastest pace of interest rate hikes since the 1980s.
The decline in paper board shipments is a sign of broader economic problems.” Where’s the recession?” Danielle DiMartino Booth, CEO of QI Research, took to social media platforms to sarcastically ignore the problems exposed by the performance of U.S. packaging companies.
The U.S. is in the midst of a “cardboard box recession,” which could lead to a weaker job market and more pressure on corporate earnings, but could also lead to a sharp slowdown in inflation by the end of the year.
Klein Topper said in a report on Monday, although the recession usually leads to all sectors of the economy shrink, but currently only the manufacturing and trade sectors have shrunk significantly. According to the U.S. Fibre Box Association, this has led to a decline in demand for cardboard boxes – an overlooked indicator of a recession that preceded previous U.S. economic downturns.
Although the U.S. has not officially announced that the economy is in recession, but Knechteling Top said the U.S. economy is currently in a “cardboard box recession”, which could lead to a weaker job market, businesses face greater profitability pressures. Investors may also see low stock market returns, especially if the weak trend spreads to other industries such as services.
But the downturn could also offer a glimmer of hope for a slowdown in inflation, as manufacturing prices – including cardboard box prices – in U.S. PMI data are typically about six months ahead of inflation.
The data showed that U.S. used corrugated carton (OCC) prices rose for the second consecutive month in most of North America in the first week of May, pushing up the average OCC price for the month. Overall, the average U.S. OCC price has risen $12 since January.
Seven of the nine regions tracked by RISI’s P&PW reported higher OCC prices in early May. In the Southeastern, Northeastern, Midwestern, Southwestern, and Pacific Northwestern U.S., FOB seller’s dock prices were up $5.
For domestic U.S. paper mill operations, OCC prices fell for all bulk grades in the Los Angeles and San Francisco areas. This is the only region where supply is said to exceed demand. For OCC and new DLK, bulk grade production is said to remain stagnant, up to 25% in the US.
The market scale of China’s cardboard box industry reached tens of billions of RMB in 2023, an increase of nearly 10% from the previous year. This expansion of the market proportion is mainly attributed to China’s solid economic growth, booming e-commerce industry, and logistics industry’s.
Post time: Dec-02-2023