Demand for folding cartons could grow by almost 5% in 2022, with supply still struggling to keep up, according to experts. Paper packaging industry analysts at NOA say indications are that demand across Europe for folding cartons will rise by 4.9% this year (compared to 3.7% in 2021), and nearly 2% of this growth is due to the ‘green wave’ or replacement of plastics.
“Ironically, it is increased demand for plastic which has partly fuelled this green wave,” said Neil Osment, Managing Director of NOA. “When the pandemic first hit, and so many of us were shopping from home, much of our food came wrapped in plastic. Food and drink producers were already exploring a switch over to paper and, when demand for plastic rose, this trend accelerated.”
In the UK, the plastic tax which came in on 1st April (taxing any plastic packaging not comprising at least 30% recycled plastic), is also likely to increase demand for paper-based packaging, as brands and manufacturers switch.
Corrugated is also in high demand, although the rate of the increase is beginning to ease a little in the first few months of 2022. In the UK, this demand for corrugated spiked at +10% in mid-2021, falling back to +2% in the summer when working from home rules were relaxed. Other European countries had a similar experience. Germany, France, Italy and Spain all saw a marked rise in demand for corrugated in 2021, with the rate of increase also falling away in the summer of 2021 when hybrid working arrangements became more common.
“There appears to be a direct correlation between working from home and an increase in demand for corrugated, which is clearly being fuelled by e-commerce,” said Osment. “This extraordinary demand for e-commerce packaging reduced notably as soon as working from home restrictions were eased, but demand nonetheless was on an upward trajectory still of around 2% across Europe to the end of 2021 for those last four or five months. Things have calmed down a little in 2022, however demand is still notably up when compared to 2020.”
Osment attributes this recent calm in demand to 2021 being such an extraordinary year. Corrugated demand has dropped in the first two months of 2022 compared to 2021, but in early 2021 the Brexit factor caused congestion in the supply chain, with high demand and a lot of over-ordering. Compared to January/February 2020 demand for corrugated is still at a healthy 2-3% growth.
In 2022, the changing pattern in working from home, to working in the office three days a week (a trend dubbed TWT – Tuesday, Wednesday, Thursday) has eased the demand for e-commerce corrugated. De-stocking, inflation and the impact of war in Ukraine may also be having an effect.
Papers mills and sheet plants had been struggling to keep up with demand across the board over the last six to nine months, and the situation became exacerbated by a shortage of fibre in the right places last year.
Pre-pandemic, fibre recycling rates in the UK and mainland Europe were around 85%, but more recently these have dropped as low as 65%.
Osment added, “Clearly, not every home is efficient in returning its cardboard waste for recycling. Some waste will end up in landfill, some will stay in the home indefinitely, and some may be hoarded for a few weeks before being put into the recycling bin. This all means that a large percentage of paper-based waste is taking longer to get back into the recycling supply chain, or is leaving it altogether.”
In the UK, each home is thought to be holding on to seven cardboard boxes on average. With 28 million homes, that’s the equivalent of about 50,000 tonnes, which translates to 15-20% of the annual output of a good-sized global paper mill.
However, new waste collection systems in the UK and across Europe should help improve the collection of recycled fibres. The pressure is now on for some more recycled board mill capacity for the folding carton market in Europe, while the war in Ukraine is putting pressure on ongoing supplies of virgin pulp and kraftliner.