North America containerboard quarterly: Q4 2025

A year ago, we welcomed the new year with a USD 40/metric ton price increase and optimism for a stronger market. Today, as we close out 2025, the outlook is far less encouraging. The industry is entering its third year of downturn, with little prospect for a meaningful recovery before 2027. According to our latest forecasts, US containerboard demand is expected to grow at a 1.5% CAGR over the next 24 months, while supply is projected to rise slightly faster at 1.6% CAGR. We anticipate one to two price increases, but likely not until the second half of 2026 and into 2027.

This has been one of the most challenging years in the containerboard sector’s recent history, marked by weak sales volumes and significant capacity closures, with no quick recovery on the horizon. Adding to the difficulty, the US government shutdown has left us without much of the critical data we typically rely on for this quarterly update. So we’re flying blind. For this edition, we’ve done our best to estimate the macroeconomic indicators that would normally come from sources like the Bureau of Labor Statistics and US Census, but please note that these estimates may carry more uncertainty than in previous reports.

From the limited data available, specifically the US Census’ advanced monthly retail and food service sales, retail sales rose just 0.2% in September compared to the prior month, falling short of analyst expectations. Mounting inflationary pressures, particularly from tariffs, combined with a weakening job market, have made consumers even more cautious with spending in this holiday season. This stagflation directly impacts containerboard demand, as much consumer spending ultimately arrives packaged in corrugated boxes.

According to the latest RaboResearch forecast, real US GDP is projected to grow by 1.8% in 2026 and 1.7% in 2027 (see table 1), with inflationary pressures expected to ease only in 2027. Private consumption and trade are likely to remain under strain in 2026 before recovering in 2027. We anticipate that e-commerce will continue to outperform brick-and-mortar retail, as consumers increasingly adopt mobile ordering habits. This quarter, our proprietary vector autoregression tool[1] forecasts a slow but steady recovery in containerboard demand, projecting a 1.5% CAGR through September 2027 in the most likely scenario (see figure 1). The bulk of this recovery is expected to occur in late 2026 and into 2027. The 90% confidence interval ranges from -0.7% to 3.7% annual growth, indicating that while a slower recovery remains possible, the upside scenario appears more probable. E-commerce is the most important driver for containerboard demand, followed by GDP and the Manufacturing Purchasing Managers’ Index, an indicator of manufacturing activity. Other industry-specific performance data and macroeconomic indicators also feed into our tool as independent variables.

[1] The quantitative tool was developed by RaboResearch to forecast North American containerboard demand, supply, and prices in the next six to 24 months. It uses vector autoregression (VAR) – a statistical method that analyzes the predictive relationships between variables, such as GDP, e-commerce sales, consumption, trade data, etc. It allows users to interact with the variables and analyze their impacts, adjust the parameters according to specific market expectations, and test various hypotheses.

Operating rates improve at the cost of capacity

The Q4 outlook points to modest growth in containerboard production over the next two years. Specifically, we expect linerboard output to increase at an annual rate of 1.6% through Q3 2027, a notable downward revision from our previous forecast (see figure 2). This adjustment better reflects current market realities.

Operating rates in the containerboard sector turned a corner in Q3 2025, averaging above 93%. However, this improvement has come at the cost of significant capacity reductions, with nearly 10% of capacity removed, either temporarily or permanently, since the 2021 peak. We anticipate further closures of older, less efficient mills through 2026, although they are likely limited to a smaller scale. As demand climbs gradually, conversions into containerboard production from other paper grades may resume, with new capacity additions likely during or after 2027.

The Q4 pricing outlook projects an annual increase of 8.1% through September 2027, driven by both industry fundamentals and inflation expectations (see figure 3). We anticipate one price hike for 42lb unbleached kraftliner, likely by around USD 40/metric ton after Q3 2026, with recycled liner prices following closely. While there is potential for an additional increase in 2027, this remains uncertain and will depend on market dynamics at that time.

Several factors underpin this forecast. First, we expect demand recovery in the latter half of 2026 to create upward pressure on prices, particularly if demand begins to outpace production capacity. Second, inflationary trends will play a role. RaboResearch projects inflation at 2.9% in 2026 and 2.5% in 2027, which will contribute to cost pressures across the supply chain. Beyond macroeconomic drivers, structural changes within the industry are reinforcing pricing power. Containerboard producers have continued to consolidate, which not only improves operational efficiency but also strengthens the industry’s ability to implement and sustain price increases. In short, while the pace of recovery remains gradual, the combination of improving demand, inflationary cost pressures, and industry consolidation supports our view of modest but steady price gains over the forecast horizon.

This marks the second year of our quarterly containerboard update covering demand, supply, and pricing trends. As we continue to refine our predictive models and analytical approach, it’s essential to evaluate our performance. So, how did we fare over the past year?