Ten percent might not seem like a lot in certain contexts, but it's notable when describing the loss of North American containerboard production capacity in 2025. On the heels of that extraordinary pullback, analysts project a more positive 2026 for containerboard, although they have different opinions on the likelihood of a bona fide recovery.
Overall, analysts expect containerboard demand at the beginning of 2026 to remain in the depressed state where it ended 2025, with some incremental improvements throughout the year.
“Just because you flip the calendar doesn't mean you start from scratch and there are new beginnings in the industry,” said Michael Roxland, senior paper and packaging analyst at Truist Securities. “There's no reason to believe there's going to be a really fundamental change in demand.”
BofA Securities Analyst George Staphos similarly quipped that the containerboard market trend is kind of like the movie Groundhog Day, in which Bill Murray's lead character keeps reliving the same day over and over.
“I said [that] somewhat jokingly, somewhat seriously,” Staphos said. “Volumes remain under pressure” for containerboard in 2026, at levels where they've been stuck for the better part of three years.
Analysts generally project that full-year 2026 containerboard demand will reach a modest 1% to 1.5% growth at most. Some characterize this as a “recovery,” while others suggest more of a plateau — which would still be considered an improvement from the yearslong downward movement. Demand will play into other 2026 trends involving pricing and facility closures, and it will be influenced heavily by consumer spending.
“If we pull back any more, we're going to be really short on capacity."
Xinnan Li
Senior analyst at RaboResearch
Demand recovery is on the slow boat, with gains more likely to occur in the second half of 2026. But RaboResearch cautioned in a 2026 outlook from Dec. 3 that the industry is “entering its third year of downturn, with little prospect for a meaningful recovery before 2027.”
Analysts expect the halt to falling demand will translate to fewer production capacity cuts. The “historic” 10% pullback in 2025 resulted in the “largest annual downward adjustment the sector has seen,” according to a Fastmarkets RISI analysis released last year. As such, it would be difficult for the containerboard sector to match that level of single-year loss again in 2026, although a few closures of older, less efficient facilities or production lines are still likely, analysts say.
“If we pull back any more, we're going to be really short on capacity,” said Xinnan Li, senior analyst at RaboResearch.
Operating rates, pricing and threats
All those closures didn't happen overnight, so the 10% capacity loss should be fully realized by February, Roxland said. For instance, certain closures that Packaging Corporation of America announced in December and International Paper announced in November will be finalized early this year. Already, “the industry now is in a better position,” Roxland said, and “hopefully, that will offset some of the demand weakness that we believe will persist.”
The consolidation has been an effort by producers to optimize their own operating assets, “looking internally to see how they can match their production with a demand forecast. I think that's been extremely effective,” said Li, pointing to the bump in operating rates that has accompanied the closures.
Operating rates have moved up into the low 90s, and they should reach the mid-90s this year, Staphos said. The movement is fueling predictions that the major companies will announce at least one containerboard price increase this year, potentially as early as Q1. Producers had cooled their pace of containerboard price increases in 2025, following most announcing at least two increases the previous year.
Company executives repeatedly pointed to high input costs when explaining that rash of price increases, with OCC alone charting a 245% spike in late 2024 compared with January 2023, according to Roxland's data. “Historically, that is something that producers domestically have cited as a reason why they would raise containerboard prices,” he said. But input costs overall have since evened out and “domestically, OCC is stable at very low prices,” Roxland said.
Jefferies mirrors that sentiment, explaining that surging OCC prices reversed course in the second half of 2025. In December, OCC prices dropped 37% year over year and 16% quarter over quarter, according to a Jan. 14 Jefferies memo, with a prediction for a further dip in January.
“I think CPG activity has been the biggest constraint to packaging and paper as a whole. Americans are struggling — really, sincerely struggling.”
Michael Roxland
Senior paper and packaging analyst at Truist Securities
A market threat coming down the line — although not necessarily immediately — is returnable plastic containers, said Ryan Fox, corrugated packaging market analyst at Bloomberg Intelligence.
“If containerboard price increases continue and plastics do not increase along with them, then you may see some tradeoffs as people look for some respite,” he said.
Another element that Bloomberg Intelligence believes will eat into 2026 volumes is “the acceleration that we saw in paper mailers, from Amazon specifically, but also from other online merchants,” Fox said. “We've seen millions of boxes get replaced with paper mailers” in recent years, and that momentum should increase. Overall, Bloomberg Intelligence predicts a 1.5% year-over-year decline in corrugated box shipments for the year.
Analysts predict some further consolidation in 2026 by containerboard companies aiming to rightsize their footprints. That initially could include large companies like International Paper and Smurfit Westrock, although some independents are expected to announce closures as well, Fox said.
At International Paper, for instance, CEO Andy Silvernail has spoken extensively about consolidation via the “lighthouse” hub strategy and the “80/20” operating principle he implemented. Executives spoke on an October 2025 earnings call about the efficiency gains and cost cuts from the model's reliance on fewer, more modern facilities that operate more efficiently. The business transformation already has resulted in a wave of closures and more than 4,500 job cuts since October 2024.
“This is what they're trying to build in Waterloo, Iowa, for instance,” Fox said. “A superplant that can do lots and lots of volume, and then consolidate some of the area plants around it.”
Philip Ng, equity analyst at Jefferies, similarly referenced IP and SW in a 2026 outlook note to investors from Dec. 17, 2025, saying both companies' management teams “are making tough decisions & showing progress.”
Analysts do not anticipate the internal consolidation will translate to major M&A deals or divestitures in the containerboard sector this year. Multibillion-dollar megadeals that cropped up during the last two years — including Smurfit Kappa acquiring WestRock, International Paper acquiring DS Smith, and Packaging Corporation of America acquiring Greif's containerboard business — have shrunk the playing field, making M&A activity this year more likely to be for smaller-dollar deals among smaller players.
Consumer crunch
Following the surge in packaging volumes during the COVID-19 pandemic, packaging “entered a prolonged correction phase,” mostly due to consumer spending shifts, according to Jefferies. While the whole industry has since underperformed because of consumer spending shifts, containerboard was among the especially hard-hit sectors. BofA Securities said in a 2026 outlook released Jan. 5 that “the sector has effectively been in a mild recession since COVID despite what had been some modest improvement in our last survey.”
Various analysts expect that shaky consumer confidence and spending, largely influenced by sticky inflation, will extend well into 2026.
“I think CPG activity has been the biggest constraint to packaging and paper as a whole,” Roxland said. “Americans are struggling — really, sincerely struggling. Their dollars are stretched, and they're making [purchasing] decisions based on that.”
CPGs and restaurants have been running promotions to lure value-seeking consumers, and that activity should continue at least into early 2026, analysts say; any increased volumes from promotions would carry over to packaging demand.
Consumer purchases also could get a lift from a special event partially taking place in the United States this year: the World Cup.
“Food and beverage is such a big piece of packaging demand, overall,” Staphos said. While BofA anticipates “beverage packaging will be better in ‘26 in part because of the World Cup,” meaning a potential boost for aluminum beverage can manufacturers, that increase would also "filter into an improvement in containerboard and corrugated box consumption" because the beverages are shipped in secondary packaging, he said.
A recovery in consumer confidence could improve demand in the second half of the year, Jefferies says. Plus, the Trump administration could take measures to further stimulate consumer activity, such as implementing tax cuts and sending tariff dividend checks, according to Jefferies.
“There's a very good correspondence between what we see in real personal disposable income and then the resulting change in box shipments,” Fox said. “We don't feel that the average American is going to have more real personal disposable income, and so we've estimated that box shipments will decline again.”
Producers and analysts generally said tariffs had limited impact on the containerboard sector last year. However, additional effects possibly could show up in 2026, Fox said: “If there is inflation on goods, and that is passed on to the consumer, and they have less money, then it will eventually trickle down.”
The inflation rate has dropped from its 40-year peak of 9.1% in 2022 to 2.7% in December, but “our expectation for inflation for ‘26 is 2.9% — which is still quite high relative to where the Fed wants it to be” at 2% or lower, Li said.
The labor market is another influential factor. The Department of Labor's data release this month showed December jobs numbers that were more lackluster than hoped, with 2025 bringing the slowest rate of jobs growth since 2020.
“If you don't have jobs, whether it's physical labor or white collar jobs, you can't afford to buy the extra things that you need,” Li said, tying together various economic components. “Containerboard actually is a pretty good indicator for the overall economy.”
On the plus side, she said, the continued notable growth in “e-commerce really is going to continue to be a bright spot for containerboard demand, despite all of the other depressing factors.”
