Australia’s supplies of folding box board and other coated cartonboard grades are all imported, with a few major countries dominating. Based on trade declarations, Australia’s imports of raw cartonboard fell 6.9% in 2023-24, to a little less than 123,000 tonnes. Source: IndustryEdge
When matched with small volumes of exports, that led the apparent consumption of cartonboard down to a record low 119,000 tonnes. Yeah. Nah. There is no chance consumption of cartonboard is that low, and in such structural decline.
So, if that’s right, where’s the Cartonboard?
Here’s what we think is happening.
Until 2014, Australia manufactured coated cartonboard. Manufacturing occurred in Queensland, at Amcor’s Petrie Mill, which closed in 2014.
Prior to the end of domestic manufacturing, the apparent consumption of Coated Cartonboard fluctuated around, but generally just below the 190,000 tonnes per annum level.
In 2013-14, the apparent consumption function declined to around 131,000 tonnes, but that was due to an estimated 50,000 tonnes of inventory being supplied into what appeared to be a stable market.
Imports – which after 2013-14 accounted for 100% of supply, are broken into four main grades (actually there are eleven, but IndustryEdge wraps them up to support sensible analysis). The aggregated import volumes can be seen below.
It is the ‘General Bleached Cartonboard’ and potentially ‘Coated Kraft Back’ imports, where there has been largely continuous under-reporting of imports.
General Bleached Cartonboard is used in a wide variety of applications, including food and beverage, pharmaceutical and healthcare, cosmetics, technology and fast-moving consumer goods packaging. Think about the boxes on supermarket shelves as well as the box your perfume or mobile phone came in.
Coated Kraft Back is used mainly in wet and humid environments like refrigerators, where it is used to hold beverages and similar products. This grade might contain some semi-chemical pulp.
In 2023-24, the main importers of Coated Cartonboard – all grades – were China (25%), New Zealand (21%), Chile (22%), Korea (15%) and the USA (12%).
IndustryEdge’s analysis suggests the volumes from Korea and the USA are an under-representation of their actual contribution to the Australian market.
The annual delivery of almost the same volume of imports for much of the last decade and now an apparently declining volume belies the growth in the market for Coated Cartonboard.
The market for Coated Cartonboard remains larger than the apparent consumption function suggests.
The involvement in the domestic market of the integrated US producers, Graphic Packaging International (GPI) and of West Rock, appeared to contribute marginally to more accurate recording of Coated Cartonboard imports for a time, but ultimately, reported consumption slipped back to the same lower than expected levels.
Largely due to improved reporting by the reinvigorated Whakatane Mills Limited in New Zealand, imports and therefore apparent consumption, of Cartonboard were reported more appropriately in 2021-22.
However, the steep decline in 2022-23 (-22.8%) and the subsequent 6.9% retreat in 2023-24 to the point where apparent consumption is at decadal lows, is not consistent with industry experience.
Supported by end-users and forensic analysis of trade flows, IndustryEdge’s analysis is that Coated Cartonboard imports may be under-reported by as much as 40,000 tonnes per annum, but by at least 30,000 tonnes per annum.
Where is the cartonboard?
It is important to state, in this modern era, there is no ‘conspiracy’ here, just simply the impact of importing remarkably similar paper and paperboard under many different import codes, where the difference is not the material, but rather, the end-use application.
In that context, some Coated Cartonboard imports are be mis-classified, most likely recorded as Medium Weight Coated (MWC) mechanical grades of printing and communication papers. There are also some imports of Coated Woodfree (CWF) Reels >150 gsm that are expected to be Coated Cartonboard grades.
The particular and main ‘culprit’ is the MWC grade manufactured from >55% mechanical pulp. Heavier grades of this printing paper – above around 180 gsm according to industry converters – are able to be used as lightweight cartonboard. MWC imports above 220 gsm are more likely to be cartonboard than they are printing paper.
One importer has advised IndustryEdge they receive the product as MWC grades, but routinely supply it to a major cartonboard customer.
The main countries impacted, as we outlined earlier, are the US and Korea. We base this assertion on analysis of specific trade transactions, including volumes and prices and flows into each state that are unlikely to be for printers and more likely to be for cartonboard converters.
As the table below shows, since exactly the period (2013-14) that local production of Cartonboard ended, Australia saw a sustained explosion in imports of MWC Reels (not Sheets) containing >55% Mechanical Pulp.
Of roughly 33,500 tonnes of imports in 2023-24, the USA and Korea supplied a little more than 31,900 tonnes.
If there is a concern in this recalculation of import volumes as we seek to assess the real size of the Cartonboard market, it is ultimately that nearly all the imports of MWC Reels >55% Mechanical Pulp are actually a packaging product.
If that is the case, we can wipe more than 30,000 tonnes more printing papers from what is already a massively contracted market.
More information at www.industryedge.com.au
