It seems as though we cannot make enough containerboard these days. What with new mills, converted (mostly from newsprint) mills and rumors of more to come, should we be worried about oversupply? Some analysts are starting to express concern.
If we look back over the last three decades, going back to 1990 or so, we have really been in a bull market in these grades (with some slight dips) for a long time. By my count, there have been at least fifteen (15) new machines built since the early 1990's, or roughly one every twenty-one (21) months. This does not count conversions from other grades or Canadian capacity increases. The startling point, however, is that if it had not been for the transition for performance-based manufacturing specifications from basis weight manufacturing specifications, the growth would have been even greater.
If Amazon is a proxy for this growth, and it seems to be a reasonable one, the issue of overcapacity in the near term has to be coupled with a discussion speculating on the near-term growth of Amazon and other direct delivery retailers. If they continue their torrid pace of growth, expect the containerboard manufacturing capacity to attempt to keep up.
In society, people seem to be trending towards doing more of other things, less of direct shopping. So, the Amazons of the world capitalize on this trend, by finding easier and easier ways for the consumer to make necessary as well as frivolous purchases on line in a very short period of time.
Just last week, I needed to buy a new phone. This involved a trip to a phone store. The nice young gentleman who helped me was knowledgeable and lived his life on the phone. I asked him when he was born --1997 was the answer. Think about it, since he was about ten years old he has been around smart phones and has grown up using smart phones to interact with everything he needs or wants in life. The containerboard industry, our "cardboard box," is vitally necessary but invisible to him. This is not going to change.
Someday, growth in containerboard capacity will moderate. It may even pause for a time, but I think we have reached a new paradigm. I suspect containerboard demand is moving towards being a predictable consumption based on population demographics, just like that of tissue products.