According to Rabobank's third-quarter 2025 report, the boxboard paper industry in North America is emerging from the post-pandemic slump and beginning to recover slowly. Rabobank analyst Li Xinnan pointed out that the market's "destocking cycle has come to an end", marking the industry's farewell to the predicament of weak demand and an operating rate as low as 80% over the past two years.
Li Xinnan said that during the COVID-19 pandemic, both consumers and product manufacturers were stockpiling packaging materials in large quantities, resulting in a serious backlog of inventory. To relieve the pressure on the balance sheet, enterprises have no choice but to carry out large-scale inventory reduction, which has led to a significant decline in the price and operating rate of boxboard paper. Now that the most difficult period has passed, the industry is expected to recover at a moderate compound annual growth rate of 0.53%. By 2027, production is even expected to grow at a compound annual growth rate of 2.82%, replenishing inventories for factories and processors.
Beware! The tariff storm is reshaping the cost chain
Although demand is starting to recover, the North American boxboard industry is facing new challenges: trade policies and tariffs.
Tariffs exacerbate inflation and drive up costs
The report indicates that with the US GDP falling into negative territory in the third quarter of 2025 and unresolved trade tensions, the upcoming tariff policy is disrupting the supply chain of pulp and paper products. The impact of inflation on the industry depends on the source of fiber raw materials, and tariff rates range from zero to 15%. For instance, coniferous wood pulp imported from Canada is exempt from tariffs, but broad-leaved wood pulp imported from Brazil is subject to tariffs of 10% or even 50%. Pulp and paper products imported from Europe are subject to a 15% tariff.
Li Xinnan pointed out that tariffs would lead to an overall increase in prices and costs. If North American producers still need to import pulp from Brazil or Europe, they will have to pay higher prices, which will undoubtedly put inflationary pressure on domestic producers as the prices of raw materials and supply chains are both on the rise.
A global reshuffle in a zero-sum game
The impact of tariffs is a "zero-sum game". It will not fundamentally affect the total volume of global trade, but it will change the trade pattern, that is, the specific import volumes of each country will change. Although American companies may gain short-term investment returns from tariff protection, the potential damage to the country's trade relations may harm export markets over time.
The cost increase driven by tariffs is forcing factories to strictly control costs and compress profit margins. Li Xinnan emphasized that the overall cost of pulp production in South America is the lowest, being $100 to $150 lower per ton than in other regions. This makes South America more likely to benefit from the current economic situation.
European producers, in addition to dealing with a 15% tariff, also have to bear the huge regulatory and compliance costs brought about by the EU's Deforestation Regulation, making the market environment even more volatile. The report suggests that factories should maintain capacity discipline, reevaluate their procurement strategies to reduce trade-related risks, and strengthen domestic supply chains to address future challenges.
Industry self-rescue: Proactively cut production capacity to build up strength for the future
Facing a challenging macroeconomic backdrop, American boxboard producers have not just sat idly by. To keep production in line with market demand, the industry is stabilizing the market through "capacity discipline".
The report indicates that the factory is taking measures to keep production in line with the current market dynamics. For example:
In June, Graves shut down its West Coast Paper mill in Los Angeles as part of "optimization measures", resulting in a loss of 50,000 tons of coated recycled cardboard and 22,000 tons of uncoated recycled cardboard production capacity. The company also closed two factories in Georgia and Massachusetts in early 2025.
In May, Smurphy Vislock announced the closure of four factories as part of its "streamlining and decentralization" initiative, reducing over 500,000 tons of boxboard and coated recycled paperboard production capacity.
International Paper announced in August that it would suspend the operations of its boxboard paper mills and wood and sawmill plants in Savannah and Reisboro, Georgia, resulting in a reduction of 430,000 tons in the company's production capacity.
Li Xinnan said that the measures taken by these factories to suspend operations or even close permanently are actions that the industry is expected to take in a weak environment and also lay the foundation for enhancing future pricing power.
The recovery has driven up prices and the future is promising
The report says that despite broader economic challenges, the upcoming promotional activities during the US holiday season are expected to push up the price of boxboard. Despite a decline in consumer spending, e-commerce sales are expected to recover, and by mid-to-late 2026, the capacity operating rate will rise from the current around 80% to around 92%.
The report predicts that the price of boxboard paper will remain stable in the first half of 2026, thanks to "relatively stable demand fundamentals and strict supply-side management". As inflation subsides and trade tensions ease, demand in the packaging and industrial sectors is expected to recover slowly but steadily. However, the report also points out that producers with higher fixed costs may face pressure in the short term.
In conclusion, the boxboard paper industry in North America is undergoing a cycle of "adjustment first and then recovery". Simple capacity expansion and price competition are the end of the road. Only by constantly climbing to the heights of technology, design and service can one navigate through the cycles and achieve sustainable profitability by "digging for gold".
