Cardboard shipments surprise in first half, expected to remain strong

Shipments of corrugated cardboard surprised the industry in the first half of the year and were higher than expected, according to indicators from the Brazilian Paper Packaging Association (Empapel). From January to June, the Brazilian Index of Corrugated Cardboard (IBPO) rose 2.2% year-on-year in June to 152.3 points, accumulating a rise of 5.4% in the first six months of the year.

The sector expects the pace to remain fast in the second half of the year. “There’s a tradition that the first quarter tends to be the most difficult, but 2024 has already started out of this pattern. The good surprise is that this continued in the second quarter,” said Empapel’s executive president, Ambassador José Carlos da Fonseca Jr.

Traditionally, the second half of the year is better for this activity, with the approach of the holidays and other important retail dates, such as Black Friday.

Positive figures for the consumption of non-durable goods, a segment to which the cardboard box industry is more exposed, the growing preference for sustainable packaging, mainly replacing plastic, and the growth in eating out explain the good times.

According to Empapel’s preview, in volume, shipments of cardboard boxes, accessories and sheets reached 341,991 tonnes in June, the second-highest volume for the month since records began in 2005. There were 13,680 tonnes per working day, 2.2% more than in June 2023, with the same number of working days.

Shipments totaled 1.046 million tonnes in the second quarter, up 5.4% on the same period last year. In the year’s first half, growth was also 5.4%, to 2.05 million tonnes.

Considering the moderate scenario, Empapel projects a 2.8% expansion in shipments in 2024—in the best-case scenario, growth could reach up to 5%. According to Mr. Fonseca, despite the surprising performance in the first six months of the year, it is still too early to talk about a potential upward revision of the projections.

“There are other variables that come into the equation, such as interest rates. So, let’s not get ahead of ourselves,” he said, referring to the end of the downward cycle in the Selic benchmark interest rate, which could have an impact on consumption in general.

According to Mr. Fonseca, the Brazilian industry is prepared to meet future demand from the point of view of production capacity. Big names in the industry, such as Klabin and WestRock (now Smurfit Westrock), have recently expanded their operations. Klabin alone is adding a production capacity of 240,000 tonnes per year with its Figueira Project, inaugurated in April with investments of R$1.6 billion

In Greater São Paulo, the Mazurky group, which has a factory in Mauá, has hired more workers and is investing R$36 million in new equipment. As well as traditional packaging, the company also produces cardboard shopping baskets for retailers and furniture (tables that can bear weights of up to 20 kilos and chairs that can hold up to 100 kilos.

According to Diego Araújo, Mazurky’s commercial manager, demand is expected to grow in the second half of the year, in the wake of seasonality and the preference for sustainable products, which has boosted demand for cardboard.

“To meet the market growth, the company has sufficient installed capacity and is investing in improvements and expansions of production lines,” he said, adding that Mazurky is also seeking “strategic partnerships to guarantee the availability of raw materials and optimize logistics.”

Translation: Marina Della Valle

Source: Valor International; click here to access this story’s first rendition: https://valorinternational.globo.com/business/news/2024/07/23/cardboard-shipments-surprise-in-first-half-expected-to-remain-strong.ghtml

Sharing is caring!