The folding carton market has been slowly recovering since it hit a low in 2002. However, market projections for 2005 are a mixed bag.
IT'S EASY FOR the folding carton market to be optimistic about the future if it bases its outlook on 2004's end-of-the-year numbers. According to the Paperboard Packaging Council (PPC), last year saw a 4.4 percent increase in folding carton shipments by dollar value, and a 4.3 percent rise by volume, reaching a total of $9 billion on the year.
However, things aren't as golden as the statistics make it appear. Recent information from the large, integrated companies reports a $50 per ton material increase, due to take effect within the next month or so, said Pete Reiber, vice president of Columbus Paperbox and chairman of the National Paperbox Association (NPA). "When they start to feel the pinch, [smaller folding carton companies] will feel it a month or so later," Reiber said.
Reiber's worries are substantiated by the PPC's annual "Trends: Industry Outlook and Market Data Report" for 2004, which was released in August. In the report, Resource Information Systems Inc. (RISI)—a forecasting arm of Paperloop that prepared the outlook and forecast sections of the report—projected rising boxboard costs. RISI forecast real prices for bleached folding boxboard to rise 5 percent in 2005 from their 2002 average. In addition, real prices for unbleached board were projected to increase more than 8 percent during the same time frame. The report also predicted these rising costs would force converters to increase the price of their folding cartons.
Passing rising costs onto customers isn't going to be an easy feat, Reiber said. "Customers are already looking for ways to cut costs," he said. "For example, if we're printing 24 pt. SBS for a customer and they come to us saying they have to save money here some how, we tell them not to change from SBS—it's a great surface with great print quality. We suggest maybe using a 22-caliper or 20-caliper board—bring down the caliper and it saves customers money."