According to the latest data from the American Forest & Paper Association (AF&PA), the North American boxboard market as a whole showed a downward trend in production in the second quarter and the first half of 2025. The output of boxboard paper in the second quarter decreased by 5% year-on-year, and the total output in the first half of the year also dropped by 3% compared with the same period in 2024.
Weak demand and high inventories
From the perspective of export data, the export volume has dropped by nearly 12% since 2025, indicating weak international market demand. Meanwhile, the domestic new supply also decreased by 1.2%.
Data from AF&PA shows that boxboard inventory reached a 15-month peak in May. Although it slightly declined in June, it still remained at a high level of 433,000 short tons at the end of the quarter. Michael Roxland, a senior analyst at Trust Securities, pointed out that since 2001, the inventory of the entire system has typically increased by about 72,000 tons on average from June to September. Therefore, there is still a possibility that the inventory of boxboard paper will increase in the third quarter.
Production cuts for self-rescue: Enterprises are ceasing production one after another
Facing the persistently weak market demand, major producers have taken measures to cut production one after another. Roxland mentioned that executives of the US packaging company disclosed during the earnings call that there were no plans for maintenance downtime in the third quarter, and the economic downtime might be reduced. However, this contradicts the previous statement made by the company's CEO, Mark Khorzan, who said on July 24 that the company had halted production in the second quarter due to weak demand, resulting in a year-on-year decrease of 85,000 tons in boxboard production.
Another industry giant, International Paper, also plans to allocate approximately 46% of its maintenance downtime (calculated at cost) in the second half of the year to equipment maintenance. Roxland speculated that the company might have also increased economic shutdowns to deal with the situation after the market destocked.
Since the beginning of this year, North American boxboard producers have announced the closure of at least six large factories, which have collectively reduced market capacity by approximately 6%. Analysts generally expect that more factories may close in the second half of the year. It is widely believed in the industry that these large-scale capacity cuts will help rebalance the supply and demand relationship in the global boxboard paper market to address the problem of oversupply that has existed for many years.
Price outlook and challenges
Roxland believes that capacity cuts should be able to support prices. But he also emphasized that to achieve the price increase in 2025, several key conditions still need to be met:
1. Further capacity closure: The market needs to continue cutting excess capacity.
2. Significant recovery on the demand side: There must be a substantial recovery in market demand.
3. Resolution of tariffs related uncertainties: Market issues related to tariffs need to be addressed.
Roxland pointed out that considering the boxboard market usually slows down seasonally in the fourth quarter, producers must announce their prices successfully this year before September.
Going against the trend: Expansion projects draw attention
Despite the overall shrinking market capacity, some large-scale expansion projects have gone against the trend, adding uncertainty to the future market supply and demand balance.
Green Bay Packaging Company: Announced an investment of over 1 billion US dollars to expand its kraft paperboard mill in Morillton, Arkansas, which is expected to double its annual production capacity to over 1.03 million tons.
Domtar Company: It is considering converting its news paper mill in Gatineau, Quebec into a boxboard paper mill. Roxland estimates that this production line could produce 350,000 to 400,000 tons of recycled kraft paper annually, but the conversion cost could be as high as 350 million to 400 million US dollars.
Hood Container Company: Plans to invest nearly 119 million US dollars to upgrade its old factory in Louisiana. It is expected that after full operation in 2027, the annual production capacity will increase by 80,000 tons.
Roxland warned that in the current market environment of persistent oversupply, these new production capacities would have a "negative impact" on the supply and demand dynamics of the boxboard paper industry in North America.
Local highlights: Demand for some paper products has picked up
Despite the unfavorable overall environment, the data from AF&PA also show some positive signals. The operating rate of boxboard paper in the second quarter was 87.6%, a decrease of 1.8 percentage points compared with the same period in 2024, but the output of some paper products increased. Among them, the output of SBB (solid bleached cardboard) increased by 6%, and the output of cardboard used for plates, saucers and trays even rose by 10%.
Roxland said that the volume of unfulfilled orders is an important indicator for measuring market demand, and current data shows that market demand is gradually recovering. He particularly mentioned that the demand for SBB, unbleached kraft paper and coated recycled cardboard was strong, while the demand for uncoated recycled cardboard was relatively weak.
