Economic and geopolitical disruptions are heavily impacting paper and packaging businesses and creating market volatility, according to fiber company executives who spoke at the Jefferies Global Industrials Conference on Thursday.
Cost inflation universally continues to pose a drag. OCC prices have gone up notably, presenting a “$400 million, $500 million swing in this year alone,” according to International Paper CEO Andy Silvernail. Fuel and transport costs also are significantly higher due to the war with Iran.
“We all know those challenges that are out there, and they’re undeniable,” Silvernail said of trade, tariffs and conflict. “At the same time, what it does is it sets the context for how you can compete.”
Price increases are one of the ways these companies are trying to recoup costs. Producers have announced three rounds of containerboard price hikes this year, with the most recent particularly coming under fire for the hefty price tags — $140 per ton for Packaging Corporation of America and $80 per ton for IP.
Here’s a look at trends, challenges and outlooks that three leading paper and packaging companies’ CEOs discussed during the conference.
IP adapts to demand squeeze
Silvernail reiterated claims that supply is tight. Yet demand, while steady, also is lagging expectations, in part because consumers have been hard hit by inflation the last couple years.
“In our estimation, over 2.5 years it’s cost about five points of aggregate demand,” Silvernail said. “In the broad scale of the K-shaped economy that we all talk about, that bottom of that K is being squeezed.”
All conditions considered, demand likely will remain muted for the remainder of this year and throughout 2027, he said. In addition, fruit and vegetable recalls stemming from cyclosporiasis outbreaks are affecting produce customers on the West Coast, creating a short-term negative impact to IP’s demand.
These dynamics have pushed IP to be more aggressive with removing costs and relying on price increases. Pricing is expected to be a “major tailwind” in 2027 as the most recent hikes are recognized.
IP cut about 15% of box capacity from its production network in the last two years, and reinvestments are underway. “We've been reinvesting very aggressively back into our mill and our converting systems to drive productivity, and we're certainly seeing the gains,” Silvernail said.
He referenced the company restructuring underway in Europe and ongoing efforts to close more than 40 facilities there and cut 4,000 employees. While these moves are “aggressive,” they’re “necessary,” Silvernail said. Overall for the company, “the noise that has been around the business in terms of restructuring, in terms of asset sales, that will come to a close where we'll start really driving the business on a normalized basis.”
PCA prepares to lose customers after controversial price increase
“Containerboard markets remain tight,” and PCA will continue with a planned decrease in exports, CEO Mark Kowlzan said Thursday. “We’re running full. If I had to come up with another ton, I don't know where I'm going to come up with another ton of containerboard.”
Through August, the company was on track to meet or exceed Q3 earnings guidance discussed in July. Kowlzan described box demand overall as rather healthy, with a key exception: PCA experienced lower-than-anticipated demand for corrugated, partly because of depressed sales from the agriculture sector which faces drought and parasite outbreaks.
In July and August, the company especially felt effects from West Coast lettuce producers affected by cyclosporiasis outbreaks. Even so, PCA is only “off slightly” from guidance discussed during the July earnings call, Kowlzan said.
Another small impact to volumes comes from the company exiting relationships with customers over PCA’s recent rounds of price increases.
“With the pricing activity that we're currently going through ... we will give up customers. When it comes to price, we’ll walk from some customers if that’s what it takes,” Kowlzan said. “We're not going to deal with certain matters in that regard.”
The company just began implementing its $140 per ton containerboard price increase on Sept. 1, and executives said that likely won’t have a noticeable impact on PCA’s financials until later in the fourth quarter.
Graphic Packaging International treats 2026 as a ‘stabilizing year’
GPI executives reaffirmed their most recent guidance and noted volume predictions are on track so far in Q3. However, inflation is higher than anticipated and is expected to have a $5 million to $10 million hit on the quarter, and a $10 million to $20 million hit on full-year results. GPI is now working to lower other costs and lean into price increases.
Such efforts have included streamlining the business and a 3% workforce reduction earlier this year.
“We’re really getting ahead of the inflation that's hitting all of us in this industry and in consumer packaged goods,” CEO Robbert Rietbroek said Thursday.
GPI is pleased with Fastmarkets RISI’s recognition of a $60 per ton price increase for solid bleached sulfate folding carton and cupstock. The market has not recognized hikes on other grades so far.
Capacity is tight for most of GPI’s offerings, but there is some extra capacity for recycled grades from GPI’s new mill in Waco, Texas.
“Waco was overspent, but now that we are beyond that, we actually are really enjoying the benefits of this incredible recycled platform that we have,” Rietbroek said, referencing the higher-than expected cost to build Waco, which resulted in elevated capital spending.
GPI recently announced that the Waco site would also begin producing uncoated recycled paperboard. “We are very hopeful that it'll be about a 100,000-ton business for us,” he said.
Rietbroek concluded that 2026 “is a definitely stabilizing year, and that allows us to build a platform for growth for the future.”
