Are paper products on a growth path?

Although ink-on-paper communication continues to struggle against the digital revolution, a packaging sector buoyed by sustainability perceptions is leading to optimistic forecasts for global pulp and paperboard output.

Houston-based business information provider Industrial Info Resources (IIR) says it is “tracking a rise in planned North American pulp and paper maintenance and capital kickoff expenditures for 2021.”

IIR notes that “project delays this year resulting from COVID-19” are a contributing factor to what could be an impressive level of investment in 2021. The amount of investment it portrays is nonetheless impressive, with IIR writing that it is “tracking more than 680 active projects valued at more than $5.7 billion planned to kick off construction in 2021.”

State-by-state data aggregated by IIR shows Virginia attracting the most investment, with more than $580 million in planned construction kickoffs on the docket there for next year.

Other states or provinces with $250 million or more in the planning stage include Georgia, Louisiana, Maine, South Carolina and Utah in the United States; British Columbia and New Brunswick in Canada; and Neuvo Leon in Mexico.

On the recycled-content containerboard front, Hartsville, South Carolina-based Sonoco announced in mid-April it was purchasing an uncoated recycled paperboard (URB) mill system at a plant in its headquarters city. The upgrade will transform the corrugated medium machine into what Sonoco calls “a state-of-the-art URB machine with annual production capacity of about 180,000 tons.”

The expenditure is part of $83 million in capital investments approved by Sonoco’s board of directors.

In March, an Argus Research analyst upgraded the stock rating of Lake Forest, Illinois-based Packaging Corp. of America (PCA) based in part on “the increased use of paper products as consumers stock up on goods in response to the coronavirus.”

Although PCA closed down one of its printing and writing paper mills shortly after that upgrade, the analysis focused on output from and demand for products from the firm’s six containerboard mills. Those mills help PCA consume more than 1 million tons of recovered fiber annually, according to a recent PCA Responsibility Report.

Another packaging subsector poised for growth is molded pulp, according to a forecast prepared by the Freedonia Group, a division of MarketResearch.com based in the Cleveland area.

Freedonia Group’s research on the molded pulp sector in the U.S. has pegged it as forecast to grow by 6.1 percent annually, becoming a $1.3 billion industry by 2024.

Writes the company, “Though near-term disruptions in supply and demand will result from the COVID-19 novel coronavirus pandemic, the key trend driving molded pulp packaging sales—rapidly expanding demand for sustainable packaging alternatives—is expected to support a quick return to strong growth as the effects of the virus subside.”

Regarding molded pulp’s perceived environmental advantages, the forecast considered “specifically its recyclability, biodegradability, and ability to be composted in industrial facilities.”

Another key factor supporting molded pulp’s strong sales growth, according to Freedonia Group, is a potential “backlash against single-use plastic products manufactured from expanded polystyrene (EPS) foam, as well as bans on certain EPS food service products in a growing number of cities.”

Adds the research firm, “Over the long term, the fastest annual sales increases are projected for the food service market, as eating and drinking establishments increasingly invest in environmentally friendly molded pulp clamshells, plates and bowls and lunch trays for delivery, takeout, and for serving food.”

Reactions to the COVID-19 pandemic are “having a significant near-term impact on the U.S. molded pulp packaging market,” notes Freedonia Group, citing governments ordering “the closure of nonessential businesses, including many restaurants and other eating and drinking places, which are intensive users of molded fiber clamshells, plates, bowls, and other food service products.”

Adds the firm, “Nevertheless, continued use of drive-through and carry-out food service and grocery stores will help sustain sales during the crisis. And a boost in online shopping among self-isolating consumers has the potential to drive up sales of molded pulp protective packaging.”

The full study, which can be ordered from The Freedonia Group, includes historical demand figures and forecasts to 2024 “at the manufacturer level, by market (primary packaging for food and nonfood items; food service packaging; and protective packaging) and application,” according to the firm. The study also features what Freedonia calls “a comprehensive corporate analysis, including market share by company.”

In Europe, sustainability has long played a role in the marketing strategy of paperboard producers. “The European forest fiber and paper industry is the only mainstream industry that is both renewable and recyclable,” states the Brussels-based Confederation of European Paper Industries (CEPI) in a recent sustainability report.

A fact sheet covering 2018 compiled by CEPI claims Europe recycles 71.6 percent of its discarded paper annually and that “in Europe, every paper fiber is recycled 3.6 times per year” on average. CEPI also says of its mill operating members, “Over 50 percent of the raw material we use consists of paper for recycling.”