Overall market conditions in the Asian region improved toward the end of 2013. Even so, the region’s largest paper packaging market, China, recorded divergent trends for the second consecutive year: stronger growth in the boxboard sector and weaker growth on the containerboard front.
Specifically, our estimate for ‘China’s containerboard demand now shows 1.7% growth in 2013, down from our prior estimate of 2.2%. Production halts and closure activities are believed to have had a greater impact on dragging down growth in the containerboard segment than was the case for the boxboard sector. We came to this conclusion because the country’s ratio of annual output growth dropped to 20% or so of capacity that started up during the year, compared to a figure of more than 100% just few years ago. Medium-term growth prospects for containerboard also weakened due to the changing nature of domestic demand, delays in economic and industry rebalancing, and poor operating conditions of small and medium sized mills.
For boxboard, China’s demand is estimated to have increased to 6.4% during 2013, compared to 4.6% in 2012. Moreover, domestic boxboard production grew by 10%, the highest amount over the 2008-2013 period, reflecting a mix of expedited capacity increases (annual growth peaked at 16.4%, including two 1 million tonne ivoryboard machines launched in the first half of 2013) and some implemented closures.