“Hope springs eternal” might become the mantra for those still looking for a corrugated industry turnaround in 2026. While a historic level of production capacity cuts in 2025 spurred optimism that demand could pull up from a yearslong slump, factors such as the war in Iran are reshaping the probability of a comeback.
“People were feeling that there was a little bit of light at the end of the tunnel at the beginning of this year,” said Myles Cohen, founder of consulting firm Circular Ventures. “People felt like we turned the corner and were optimistic eight weeks ago. But now, they're hitting the brakes.”
Analysts overall expected the depressed state from 2025 to continue into 2026, but with slow improvement as the year progresses. Producers’ reports and analysts’ coverage of more positive demand trends early in Q1 tracked with those projections.
However, conditions later in the quarter prompted more questions about the likelihood and extent of a turnaround in 2026. Specifically, the Iran war that began on Feb. 28 is causing widespread economic uncertainty, which clouds the outlook for containerboard demand in the coming months.
Packaging company stocks have been among the hardest hit since then, and negative impacts have trickled through packaging supply chains. Increased fuel and logistics costs driven by the war “present a near-term pressure point,” according to Ryan Fox, corrugated packaging market analyst at Bloomberg Intelligence. However, the full impact on corrugated demand could take 12 to 24 months to materialize, he said.
Iran, Israel and the United States agreed to a two-week cease-fire Tuesday, on the condition the Strait of Hormuz reopens for shipping traffic. Even if this sticks and the war ends, it will take months for oil and gas production and export logistics to renormalize, according to a Wednesday memo from research and consulting firm Wood Mackenzie.
"Demand is clearly not improving, and that was the case before the Iran war."
Adam Josephson
Founder of Sakonnet Research
Corrugated demand is closely tied to consumer spending, which has lagged in recent quarters. War-driven costs compound an already inflationary environment. At the same time, systemic trends like lightweighting that have tamped down corrugated use in recent years show no signs of easing, adding to doubt about whether containerboard producers' stated demand upticks in January and February are sustainable or only represent a blip.
“It's the cumulative effect of all of those things that is worrying,” Cohen said. “There is more uncertainty out there right now than I think we've seen in a very long time.”
Yet some analysts remain cautiously optimistic about containerboard's prospects for the year — though they avoid predicting a significant rebound.
BofA Securities analyst George Staphos noted in the firm's most recent box survey, released March 18, that he remains positive on containerboard, though more risks have materialized. Survey respondents expected growth in the second and third quarters to be 0.4%. That's “well below the long-term average growth expectation of +1.5% since the Great Recession,” Staphos wrote, which suggests actual growth trends in Q2 will be flat or down.
Truist Securities cited some demand improvements in the first quarter alongside the last of the facility closures from the loss of approximately 10% of containerboard production capacity in North America.
The containerboard market will feel these capacity changes more in the first half of this year as inventories are whittled down from the long-standing oversupply, and buyers then need to make purchases, said Michael Roxland, Truist Securities senior paper and packaging analyst. “Volumes are moving in the right direction,” at least for International Paper and Packaging Corporation of America as of their late-February disclosures, he said.
“I think things should tighten up nicely by mid-year again — assuming that the backdrop doesn't capitulate because of all the geopolitical stuff,” Roxland said. “I do think we're at a positive inflection point for containerboard.”
Demand dings continue
Overall, demand for containerboard has declined over the last three decades, barring a brief boom during the COVID-19 pandemic. Observers have predicted the recent production capacity pullback could help rebalance supply and demand dynamics.
Executives at industry giants such as International Paper and Smurfit Westrock cited green shoots in January both for demand and operating improvements. PCA President Tom Hassfurther asserted that the containerboard sector “feels improved” and that there was a “much more positive vibe across our entire customer base right now.”
That aligned with what many analysts had predicted: a slow start to the year but overall 1% to 1.5% containerboard demand growth in 2026. On the flip side, Bloomberg Intelligence’s Fox is among those standing by earlier predictions for further degradation, with the expectation of a 1.5% year-over-year decline in corrugated box shipments for the year.
The continued drop in corrugated demand is one of the leading problems with some industry observers' belief that capacity cuts alone would markedly improve conditions, according to Adam Josephson, founder of Sakonnet Research.
“Demand is clearly not improving, and that was the case before the Iran war,” he said. “There was not going to be an upward trajectory in 2026. In my humble opinion, the Iran war only made things that much worse,” and “costs are only going higher, which is likely to further adversely affect box demand.”
Box shipments correlate to changes in real personal disposable income, and Bloomberg Intelligence continues “to see no meaningful deviation from this relationship,” Fox said. Consumer spending makes up approximately two-thirds of U.S. economic activity, and economists have repeatedly noted sluggish spending, especially late last year. Now, cost pressures related to the conflict in the Middle East are exacerbating the issue.
Economists now regularly reference the United States being in a K-shaped economy, where only the highest-income households — roughly 10% — grow their wealth and fuel consumer spending, while low- to middle-income earners — roughly 90% — struggle with inflation and affordability. “The gap is extraordinary and it's getting wider,” Josephson said.
He noted how consumers’ lower amounts of disposable income result in reduced spending on goods — reiterating that consumer spending influences corrugated box volumes. In March, the U.S. Department of Commerce's Bureau of Economic Analysis released January consumer spending data that showed most discretionary categories were flat or down month over month, while proportional spending on essentials such as healthcare and housing climbed.
"E-commerce alone is not going to reverse the course of where the industry is going."
Xinnan Li
Senior analyst for packaging and logistics at RaboResearch
Some economic forecasters were optimistic about consumer sentiment in 2026 because of the One Big Beautiful Bill Act and the associated higher tax refunds this year. IRS data from the week ending March 27 showed the average tax refund so far was about $350 higher than last year.
But the Iran war impacts are eating away at the early optimism, according to Josephson. “Now we have higher gasoline prices and higher fertilizer prices and many other higher prices. So it's not likely that we'll feel much — if any — impact from those higher tax refunds,” he said.
“There's not a single category that contributes to box demand that's doing well,” except perhaps produce and agriculture, which is the only non-economically sensitive box demand category, Josephson said. “It's hard to draw any other conclusion but that box demand will remain under pressure for the foreseeable future — at least through this year.”
Containerboard producers will shed more light on Q1 performance when they report quarterly earnings in late April. So far, demand signals have been a mixed bag, according to Xinnan Li, senior analyst for packaging and logistics at RaboResearch.
“I've heard both. Some are saying demand has been stable. Some are saying they're still struggling,” she said. “Overall, I think we're probably less optimistic on the demand side, compared to the pre-Iran situation.”
On a positive note, e-commerce is doing well, and that helps containerboard demand. But “e-commerce alone is not going to reverse the course of where the industry is going,” she said, and broader improvement for the manufacturing, retail and consumer segments is needed for a notable corrugated turnaround.
“I think the industry in general was pretty hopeful for 2026 to finally be the year,” but now “the outlook is not great,” Li said. “Eventually, the rebuilding has to happen — on top of consumer demand coming back. So we do think the industry is going to recover, but it might just be very, very slow.”
Permanent vs. temporary losses
Factors affecting the containerboard demand decline fall into two categories, Cohen said: economic conditions, which eventually change so the resulting decreased tons could return, and structural changes, in which tons permanently are removed.
Economic conditions include low consumer confidence stemming from inflation, tariffs, war-related uncertainty and other general affordability issues. Structural changes include corrugated lightweighting and rightsizing as well as broader packaging reduction. While it's difficult to track how many corrugated tons are permanently lost due to the rightsizing trend, companies regularly say in their sustainability reports how they're reducing their packaging use from year to year, Cohen said.
“Once a company successfully transitions to a lighter-weight box, it's forever. It's less paper, and that isn't coming back,” he said.
Examining how corrugated basis weights lessen over time is a good measure of lightweighting, he said. The average basis weight of corrugated board shipped in 2023 was around 122 pounds per thousand square feet, according to the Fibre Box Association, and hovers there today. That's down from about 123 pounds in 2020 and 131 pounds in 2014.
“I would put money on this: We might soon see the average basis weight of corrugated boxes in the U.S. being under 120 pounds per thousand square feet for the first time ever — maybe not in 2026, but in 2027,” Cohen said.
Other structural changes include e-commerce companies and other retailers, such as Amazon and Walmart, making concerted efforts to swap flexible mailers for corrugated boxes. They're also pushing to ship more items in product packaging rather than adding tertiary corrugated packaging. Fox pointed out that shipping companies also are moving toward reusable containers instead of corrugated boxes, as with FedEx's new B2B shipper offering in partnership with Returnity.
Pricing puzzlement
RaboResearch’s forecasts for both containerboard demand and pricing in 2026 have decreased significantly from analysts’ original projections, Li said. While they had anticipated another price increase this year, “it's getting less and less likely,” she said.
Containerboard price increases strongly correlate to operating rates. With rates rising the last couple quarters as production capacity cuts kicked in, a price increase initially didn't seem outlandish, Li said. Indeed, producers including PCA, International Paper and Cascades announced $70 per ton containerboard price increases to take effect the first week of March.
But current conditions are delaying any further increases, Li said. If one occurs, RaboResearch projects it won't be until very late 2026 or in 2027.
The demand situation might be a leading factor that prompted Fastmarkets RISI's $20 per ton containerboard price decrease in February that shocked experts, sources say. BofA's Staphos noted at the time that although he had warned that demand needed to improve, "we had thought market tone was gradually getting better.”
Analysts then flagged that the downward index movement jeopardized market recognition of producers' announced $70 per ton price increases. In March, Fastmarkets RISI's index reversed course, tracking a $40 per ton containerboard price increase — the first recognized hike in 13 months. Despite the partial price increase recognition and early expectations for another this year, sources now hesitate when trying to map out the price path amid current conditions.
"Q2 of 2026 could potentially be a disaster for containerboard."
Myles Cohen
Founder of Circular Ventures
Producers often cite costs increases for inputs such as energy and old corrugated containers as justification for raising prices.
“There's an inextricable link between OCC and corrugated prices,” said Bill Moore, president of consulting firm Moore & Associates.
In mid-2024, analysts estimated OCC prices had shot up 245% year over year, but movement reversed course later that year and slid for months in 2025. Observers said the spate of mill closures pulled containerboard capacity out of the system and therefore aligned OCC demand more closely with supply.
“Coming into ‘26 the corrugated box and containerboard business started to stabilize. We had all those shutdowns ... so it looked like the market for OCC was going to make a bottom in September of ‘25,” Moore said. “And then the China dry pulp situation happened.”
In October, China's government announced restrictions on dry-milled pulp imports. OCC is a key feedstock for that material, so the clampdown caused OCC prices to plummet and a "black swan event” to crop up, Moore said at the time.
“So while containerboard and corrugated stabilized, the OCC market fell off a cliff. And then it went further down — right up until January,” Moore said. “In January, I think China eased up a little ... and the OCC prices have come up a little bit.”
Those conditions are adding further complexity to the already complicated containerboard equation. Those, combined with the Iran war and other factors, are prompting analysts to hedge their predictions for a rebound, especially in the first half of the year.
“The big question is: What the heck is going to happen in the second quarter?” Cohen said. “Q2 of 2026 could potentially be a disaster for containerboard if the war continues.”
