After the corrugated board industry suffered drastic economic losses in 2023 due to the weak economy, the industry is hoping for a gradual recovery in 2024. However, this is now under considerable threat from new cost pressure, warns the German Association of the Corrugated Board Industry (VDW).
In particular the recent developments in the price of corrugated base paper is seen by the industry as extremely worrying.
„In the first quarter of 2024, the corrugated board industry recorded a 1.4 per cent increase in working day sales compared to the same period last year. After an extremely tough year in 2023, this could finally herald the start of a slight and gradual recovery. However, a new wave of costs is now threatening to undo this positive trend.“
Dr Steffen P. WürthChairwoman of the VDW
The biggest driver here is the price of corrugated base paper, the most important raw material for the production of corrugated board. At over 80 per cent, recovered paper-based grades make up the largest proportion of the paper used by VDW members. The weighted price calculated by the VDW Overall price level for brown waste paper-based grades increased by 14.9 per cent between January and May 2024. According to EUWID (Europäischer Wirtschaftsdienst GmbH), the average price for corrugating medium (waste paper-based) rose by as much as 18.9 per cent and that for testliner 3 (waste paper-based) by 18.5 per cent in the first half of the year.
Also according to EUWID, new price demands of 60 euros more per tonne are currently being made for brown waste paper-based corrugated base paper for the month of July alone.
„If this becomes established, we would be able to offer these paper qualities for the period January to July with an increase in price of 160 euros per tonne have arrived. In our view, all of the recent cost increases cannot be reconciled with the market situation. They are a massive and unjustified burden on the corrugated board industry,“ criticises Würth.
A look at the average revenues also shows that the companies organised in the VDW have the Do not pass on price increases for corrugated base paper to customers would have: After a brief sideways movement in February 2024, the previous trend of falling average revenues continued. In March alone, average revenues fell by 0.7 cents per square metre to 63.8 cents per square metre.
In addition to the price development of the raw material paper, the corrugated board industry also sees additional burdens due to further soaring freight and personnel costs to come. The VDW members expect freight costs to grow by 7.7 per cent and personnel costs to increase by 5.3 per cent in 2024. „The personnel costs item is also in the context of ever stricter regulatory requirements such as the Corporate Sustainability Reporting Directive,“ emphasises the VDW Chairman. „In order to cope with the immense increase in requirements overall, more and more additional skilled workers have to be hired - so we are talking about permanently higher personnel costs here.“
Source: VDW
