Conversions of Graphic Paper to Containerboard - How much can the market absorb?

With a decline of 48% in demand in past 10 years and the pressure on suppliers to reduce capacities of 1.8 million ton annually, the future of graphic paper does not appear in bright lights. On the other hand, the demand of containerboard has been steadily moving upwards. Suppliers in an attempt, to avoid permanent closure of their mill or the mill staying idle, are looking for feasible options to convert their capacities. A successful conversion from graphic paper mill to containerboard mill would mean positive return on asset. However, the conversion is not as simple as it may seem. Besides the technical changes and the cost that would be incurred, containerboard market has its own set of challenges. So now the question is, will the shine still remain after the suppliers convert their graphic paper mills to containerboard or will the market lose its glitter? Introduction With the start of this century, the demand of graphic paper has been falling. From 2008 to 2010, about 3.5 million tons of graphic paper was removed annually and more capacity needs to be removed to match up with the declining demand. As a surviving measure, the manufacturers started converting their facilities to produce containerboard which looked as an obvious option to avoid closures of the assets. The low basis weight of graphic paper gave way to lightweight containerboard conversion. While major players like International Paper and Domtar converted their capacities to produce fluff, other players chose containerboard as a more sustainable option, given its estimated positive growth in the future.   Author: Shradha Priyadarshini