Corrugated board industry: cost pressure and capacity utilization remain exceptionally high

The corrugated board industry can draw a positive sales balance for the third quarter of 2021. However, this continues to be strikingly disproportionate to raw material and energy prices, which are still at extremely high levels. Despite all this, the industry is demonstrating maximum flexibility in the current omicron wave and is reliably making its contribution to the functioning of supply chains, emphasizes the Verband der Wellpappen-Industrie e. V. (VDW). (VDW).

"In the third quarter of 2021, our industry was able to sell around 32.9 million square meters of corrugated board per working day, which is around 2.4 million square meters more than in the third quarter of 2020, representing an increase of eight percent," explains VDW Chairman Dr. Steffen P. Würth. "The corrugated board manufacturers organized in the VDW have thus once again succeeded in meeting a very strong demand under difficult general conditions," Würth continued. "In particular, skyrocketing raw material and energy prices continue to put massive pressure on the corrugated board industry. Paper prices are having the most severe impact, because they account for around 50 percent of our production costs."

The overall price level for corrugated base paper, in which the VDW takes all grades into account on a weighted basis, rose by 66.1 percent from September 2020 to December 2021, he said. The cost of waste paper-based corrugating medium - the main raw material for corrugated board, which is on average 80 percent recycled material - would have increased by 73.5 percent over the same period, according to data from EUWID (Europäischer Wirtschaftsdienst GmbH). Prices for corrugating medium even shot up by 83.3 percent from September 2020 to January 2022, according to EUWID. In contrast, the corrugated board price calculated by the VDW rose by just 20.3 percent from December 2020 to October 2021, it said. "This means that the corrugated board industry has continued to bear the main financial burden in recent months, which has come from the ever new highs in paper prices," Würth clarifies. Energy costs further exacerbate this situation: according to the German Federal Statistical Office, the price of light heating oil increased by 116.6 percent from September 2020 to October 2021, and the price of natural gas even rose by around 302.8 percent from September 2020 to December 2021. "Nevertheless, VDW members have remained a reliable partner for industry and trade while production capacity utilization has remained high over the long term," the VDW chairman emphasized.

He added that the current omicron wave poses additional challenges for the corrugated board industry: the logistics sector is facing a significant shortage of truck drivers, which is also having an impact on corrugated board plants. In addition, the corrugated board manufacturers themselves are also affected by a decimated workforce due to quarantine and sick leave. "Meeting the continuing high demand and at the same time protecting the health of our employees in the best possible way demands a great deal of flexibility from all concerned. However, since this quality is one of the things that particularly distinguishes us as an industry, we are confident that we will also successfully master the Omikron peak phase," says Würth.