According to analysts with Great American Group, paper demand remains stagnant in the face of competition from digital media, while demand for corrugated packaging has fluctuated over the third quarter of 2013 in line with monthly variations in the ongoing economic recovery.
"With the growing use of mobile devices, such as smartphones and tablet computers, the world is becoming increasingly paperless," said Ken Bloore, Chief Operating Officer of Great American Group's Advisory and Valuation Services division. "From mobile ticketing apps to online newspaper editions, consumers have myriad opportunities to bypass paper products."
Regarding corrugated packaging, Bloore noted that the fate of the industry is closely aligned to the overall economy, as the vast majority of goods consumed in the US are shipped in cardboard boxes at some point. Despite increases in box shipments in July and September, year-to-date box shipments were flat at the end of the third quarter of 2013, reflecting softness in the economy. The US's gross domestic product grew 2.8 percent from July to September; nonetheless, reduced consumer spending limited demand for packaging.
According to Great American Group's newest edition of its quarterly Paper and Corrugated Packaging Monitor, despite price increases for some grades of softwood pulp, pricing for paper and packaging has generally remained flat throughout the third quarter due to limited demand. Some industry sources note that packaging inventory levels in the US are particularly high and prices could decrease in the coming months as a result.
"Paper and packaging producers are being threatened by social and economic forces beyond their control," noted Bloore. "However, many continue to shape their own destiny through restructuring, various cost reductions, and streamlined inventory management strategies."
Bloore pointed out that not all paper products have struggled as there has been strong demand for paper consumable goods, such as quick-service-restaurant packaging and toilet paper. Household and sanitary paper products remain essential components of everyday life and maintained steady demand even during the Great Recession.
