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Strategic & Financial Arguments(TM)
for the pulp and paper industry worldwide

February 2019

Participating as industry experts in pulp and paper financing and M & A deals around the world  for over two decades, we continue to see the same mistakes made over and over.  This newsletter is designed to help you avoid costly mistakes we have seen others make.  We will be giving you one or two points each month to help improve your performance.
Out on a limb--softening in containerboard will not last

By Jim Thompson

Rumors continue to abound concerning containerboard grades inventory building.  Some of the data says the same thing.

I listen to the people I talk to and have talked to for years.  While there is some inventory building, I don't think it will last past mid summer, if that long.  By June or July, the end of the year build up of consumer goods will have started.  Additionally, the continued strong US economy will produce its own increases in demand.

I do have two watch outs for next year this time.  There will be more capacity coming on board--is the capacity matching the demand or outrunning it?  Secondly, it is rumored Amazon is working with companies to procure products in ready-to-ship boxes so they don't have to repackage.  If this succeeds, and it probably will in time, it is hard to tell what this will do to the market.  

One theory states that it takes a certain amount of containerboard to protect a product in shipment, so this change, if and when it comes, will merely move the usage of containerboard back up stream.  Another states that it will actually increase the use of containerboard because the original packaging will be heavier weight, but if shipped as part of at larger shipment to the consumer, the whole package containing multiple items will actually get heavier.  Pick your poison.
Have a comment?  Email me at jthompson@taii.com.

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Jim Thompson, CEO
Talo Analytic International, Inc.



JRT Banker's Engineer