U.S. Paper

U.S. Paper
Time:2025-02-24 Source:Global Printing and Packaging Industry

Abstract:
In the past few years, many domestic paper mills have been in production, however, since the beginning of this year, there have been some plant shutdowns or even closures, and some analysts predict that more mills may face closures throughout this year.

Over the past few years, a number of paper mills in the U.S. have been put into production, including those operated by Domtar, Cascades, ND Paper, Atlanta Packaging, Pratt Industries and others. In addition, more new paper mills are on the horizon, notably the billion-dollar recycled paper mill in Waco, Texas, which is scheduled to come online in the fourth quarter of this year. However, since the beginning of this year, there have been some factory shutdowns or even closures, and some analysts predict that more factories may face closures throughout the year.

As Chaved Miller, a veteran of the Maryland Recycling Network Board of Directors, noted at the Southeast Recycling Conference in Destin, Florida, Feb. 17, "Over the past few years, some of the mills have been closed because the demand for cartons is limited to that. Although we have the capacity to produce all the cartons, the actual demand is not to the point where we can fully utilize this capacity. So, what is the solution to this problem? The end result is that inefficient factories will be forced to shut down. "

The U.S. paper industry went from a frenzied expansion to an accelerated shutdown

At the end of January, Grave, a packaging company based in the Delaware area of Ohio, announced plans to close a cardboard production line in Georgia and a containerboard plant in Massachusetts. According to the plan, by the end of March, the company will cease production of its No. 1 paperboard line (A1) at its uncoated recycled board (URB) and specialty processing plant in Oster, Georgia.

Greve said the decision to discontinue operations on the A1 line, which is a non-integrated asset of Greve, was driven by rising costs and declining demand in end markets such as furniture, books and binders, which it mainly targets.

At the same time, Grave plans to permanently close its containerboard and URB plants in Fitchburg, Massachusetts, by the end of May. Greve explained that the key factors that led to their decision to close the plant were the plant's persistently high operating costs and the urgent need for "significant capital investment". These shutdowns are expected to result in a reduction of 100,000 tonnes of Greve's containerboard capacity and 90,000 tonnes of uncoated recycled board (URB) capacity per year, affecting approximately 140 jobs in total.

Greve President and Chief Executive Officer, Ole Roosgaard, said, "We are confident that the fundamentals of our business remain strong. These strategic initiatives will help enhance our competitiveness in the market and maximize the efficiency of our plant network as well as the profitability of our overall business portfolio. "

Similarly, the American Packaging Corporation's (PCA) plans to close one of its factories in the state, a move that will affect the jobs of 103 employees, according to documents submitted to the local government in the US state of Georgia. A spokesperson for PCA emailed a statement saying it believes it can serve its customers in a more efficient and efficient way by moving capacity from one of its full-scale manufacturing facilities in East Point, near Atlanta, to other manufacturing sites within the company's network.

According to the Worker Adjustment and Retraining Notification Act (WARN), the last working day of the plant's employees is expected to be in March. The spokesperson noted that the corrugated box manufacturing plant will continue to operate as normal during the 60-day WARN Act notice period. In a statement, the PCA stressed: "During this period, the focus of our work will be on our customers and employees. We understand that this is a challenging and difficult time for our employees and their families. The reason for the company's decision has nothing to do with the employee's job performance. "

Elsewhere in the industry, in addition to completing a merger with London-based packaging company Desma, International Paper has also unveiled plans to close a number of mills. International Paper has recently closed its containerboard mill in Camputi, Louisiana, in a move that is expected to reduce International Paper's annual containerboard production capacity by 800,000 tons.

International Paper's latest round of plant closures will include the Red River containerboard mill, a recycling mill in Phoenix, a carton mill in Hazleton, Pennsylvania, and a paper machine mill in St. Louis. All of these plants are expected to be permanently closed by the end of May, affecting the work of approximately 674 employees.

The move is just the latest in a long list of recently announced shutdowns for International Paper. Back in November 2024, the company announced that it would close its fluff pulp mill in Georgetown, South Carolina, as well as its packaging plants in Kansas City, Missouri, Stalltsville, North Carolina, and Cleveland, Tennessee, as well as its corrugated box mill in San Antonio.

At the end of last year, International Paper also revealed plans to lay off 400 employees in Memphis, Tennessee, where its headquarters is located. In addition, in the fourth quarter of 2024, International Paper also reported that its containerboard mills in North America have stopped production for 45,000 tons due to economic reasons.

As Ryan Fox, a corrugated packaging market analyst at Bloomberg, points out, the recent global merger of International Paper and Desma, as well as last year's merger of Murphy Capa and Visllock, could trigger further plant closures. Bloomberg expects that as many as one million to two million tonnes of capacity could be cut in 2025 as companies seek to balance supply and demand in the market.

In a press release announcing the latest plant closures, International Paper stated: "International Paper is in a critical period of transformation and upgrading, with the goal of developing into a more competitive provider of sustainable packaging solutions. A core step in this transformation will be to streamline International Paper's footprint and focus investments on manufacturing facilities that can serve customers more efficiently, while accelerating strategic initiatives to improve product quality, operational reliability and service delivery. "

Will China follow the same path as the United States?

The U.S. market has seen a wave of factory closures due to insufficient demand, and China's paper industry is also facing similar pressures: the total domestic paper output will reach 118 million tons in 2023, a year-on-year increase of 5.5%, but the inventory backlog is serious, and e-commerce demand has halved year-on-year. Chenming Paper is expected to lose 6.5 billion to 7.5 billion yuan in 2024, and the capacity utilization rate is only 23.23%, which confirms the severity of the imbalance between supply and demand.

The US$1 billion recycled paper mill planned by Jiayi Packaging Group of the United States is in contrast to the overseas million-ton production capacity layout of Nine Dragons Paper in recent years. But the costs of the frenzied expansion are already being felt in both countries: US analysts predict that 2 million tonnes of capacity could be withdrawn by 2025, while 2,000 of China's 2,000 small and medium-sized paper mills with a capacity of less than 300,000 tonnes have fallen into semi-shutdown.

From the perspective of policy regulation, many paper mills in Jiangsu will be forced to shut down due to energy conservation and emission reduction policies, and the output of white cardboard will be reduced by 117,000 tons in 2024, which is rare in the US market. In addition, the market share of China's top 5 paper companies will rise from 28% in 2015 to 47% in 2024, and the elimination of backward production capacity will be accelerated through mergers and acquisitions, while the United States will rely more on market-oriented liquidation.

From the perspective of raw material structure, China's dependence on wood pulp imports exceeds 60%, but leading enterprises hedge risks through the integrated layout of overseas forest pulp (such as Sun Paper's Laos base). In contrast, U.S. paper companies rely more on local waste paper recycling, while China's waste ban has accelerated the import substitution of recycled pulp, with the import volume of recycled pulp reaching 3 million tons in 2024.

From the perspective of demand, the per capita paper consumption of Chinese is only 15-16 kg, far lower than the global average of 57 kg, and the growth of education expenditure has driven the demand for writing paper to increase by 7.5% year-on-year. This is in contrast to stagnant demand in the mature US market (200 kg per capita), which provides a buffer for capacity digestion.

Industry experts believe that China will not simply repeat the path of the United States. On the one hand, China may avoid a wave of large-scale shutdowns in the United States through a combination of "policy forced liquidation + overseas expansion of leading enterprises", but the bankruptcy rate of small and medium-sized paper mills may be higher than that of the United States. Some special products, such as specialty paper, food-grade packaging and other high-end fields, will become new growth points, while the United States is more dependent on the optimization of the stock market.

The future of China's paper industry will be a complex process of policy-led capacity restructuring and technology-driven value jump, and its adjustment intensity may exceed that of the United States, but the systemic risk is relatively controllable. The key to the survival of enterprises lies in grasping the three-way balance of "overseas raw material base + intelligent production line + policy compliance".