With the arrival of January 1, 2025 officially opened. Over the past two or three years, the production of folding cartons and corrugated boxes has experienced a period of fluctuation. Their production declines in 2023 and bottomed out in 2024. Neil Osmond, managing director of packaging market research firm NOA, took a deep dive into the trends for the next few years.

During the epidemic and in the immediate aftermath of the epidemic, the folding carton market showed a boom due to the surge in production demand. However, this boom did not last long, 2023 began to decline, corrugated box market also appeared a similar situation, only slightly earlier.

Specifically, the order volume of folding cartons began to decline in the last quarter of 2022, and by 2023, production was reduced by 4%. However, the decline in overall values was relatively small, at just 2.2%, as prices remained elevated. In 2024, the production of folding cartons is stable.

The reasons for the decline in production are clear. In 2023, the products produced are hoarded by packers, brand owners, folding carton processing plants and so on, and now they are gradually consumed.

The warehouse is full of finished and semi-finished products, flat pack products waiting to be filled and cardboard waiting to be processed abound.

The situation is similar for corrugated boxes, but the change is more drastic. In 2021, the production of corrugated boxes increased by 8.5%, but it fell sharply in the following two years, decreasing by 5.9% and 4.0% respectively. In 2024, the decline in corrugated box production finally bottomed out.

So, how will the folding carton and corrugated box market develop in 2025? Can a rebound be achieved?

That's a good question. According to our predictions at NOA, here's what happens:

The good news is that the previous inventory overhang problem has been alleviated, and the era of so-called 'ghost orders' is over. However, the recovery of demand still faces multiple challenges. Factors such as the rising cost of living around the world, higher energy bills for households and businesses, and inflation are holding back consumption.

In addition, the volatility of the geopolitical situation has also added to the uncertainty of the market. The war in Ukraine, Houthi attacks on shipping in the Red Sea, and recent military operations in the Middle East have all impacted the global supply chain, which in turn has affected the market recovery.

In addition, we must recognize that from 2021 to 2024, demand across all industries has experienced sharp fluctuations, and we have been in an environment full of uncertainty. But we believe the market is gradually returning to a more stable state, with production and value expected to return to 2020 levels in 2025.

So, how will the folding carton market develop in 2028? This depends on a number of factors, the most important of which is the speed at which plastic alternatives are promoted and related technology advances. The attitude of consumers, the response of brand owners, the introduction of relevant regulations and the development of the plastics industry will have a profound impact on the future of folding cartons.

From a technical point of view only, the huge market of plastic packaging contains huge opportunities, which has promoted the rapid development of related technologies. This provides a broad market prospect for plastic alternatives, especially in the field of refrigerated, frozen and room temperature food. The growth momentum is very strong - the dairy industry is expected to increase the demand for fiber packaging by 58.5% in the 10 years from 2018 to 2028.

However, it is worth noting that the trend of plastic replacement is not smooth sailing. Over the past year, we have observed something in the opposite direction. For example, some supermarkets have switched their own-brand products from glass jars to plastic bottles in the hope of achieving lighter shipping weight and easier recycling.

Smithers' new market data report forecasts the changing dynamics and upcoming challenges of the corrugated packaging market over the next five years, predicting a 'modest' growth in 2024 and a 'broader recovery' in world demand.

'The Future of Corrugated Packaging to 2029' calculated that in 2023 global box board paper production reached 183.4 million tons, down 4% from the previous year. Of that, about 165 million tons were converted to cardboard, a 7% decrease from 2022, worth $224.4 billion. This result is related to the devastation caused by the COVID-19 pandemic in 2020. In addition, global logistics disruptions affected demand, and price fluctuations led to high inventories, which led to inventory reductions.

This year, however, the value is expected to rise to $231.7 billion. Thereafter, world demand is expected to grow at an average annual rate of 2.5 percent. By 2029, global corrugated packaging production is expected to reach 190 million tons, while the annual growth rate is expected to reach 3.7%, and the market value will reach $277.6 billion at constant prices.

Smithers observed that many of the major box board suppliers have started investing in additional capacity. As a result, operating rates are expected to be lower for most of the forecast period; As well as the multi-billion dollar mergers between Schmofferkappa and Weslock, and between Desma and International Paper, these business initiatives are expected to 'reshape the business landscape of the corrugated packaging industry.' Other companies are delaying further investments, taking on additional downtime, or closing old factories and carton factories to rationalize their operations.

Demand for corrugated packaging is expected to vary across the 13 different end-use areas studied by Smithers during the forecast period. For example, more than 46% of the consumption of corrugated packaging materials in 2023 is attributable to food packaging and transportation. Although it has remained relatively stable since 2016, it is expected to rise to 47% by 2029.