Packaging Corporation of America executives reported strong demand in the second quarter. Executives repeatedly described the containerboard market as tight during their earnings call Thursday. Shipments were up 24% year over year.
Some of the Q2 strength came from an e-commerce boost, said President Tom Hassfurther. Specifically, Amazon moved its Prime Day sale up a quarter into June from its traditional July time frame. “It's going to change the numbers a little bit in the third quarter. But all in all, we’re happy with that growth,” he said.
The third quarter will be the last in which PCA separately calls out the containerboard assets it acquired from Greif in September 2025. Upgrades to the acquired assets resulted in those mills in Q2 surpassing their previous production for any quarter thus far since the acquisition, Kowlzan said. The company now expects to surpass $30 million in synergies this year.
New plant startup
Operations began this month, ahead of schedule, at a new corrugated converting plant in Ohio. The 550,000-square-foot facility is “in a very strategic area for us while improving our operational efficiency over the long term,” Hassfurther said.
Overall, PCA put $206 million toward capital expenditures in Q2. It still anticipates a total of $840 million to $870 million of CapEx for the year.
Inventory management
PCA built some inventory in July after it “ended the quarter at a low number,” Kowlzan said. During the third quarter, “we will be in a much stronger position to serve our customers in very tight conditions that we're operating under.” This aligns with his statements at a June conference regarding PCA deferring some export sales to rebuild box plant inventory in the second half of 2026.
Pricing provides a lift
Recent price increases helped offset higher costs for freight and recycled fiber feedstock, especially OCC, executives said. In June, PCA began experiencing gains from its first 2026 containerboard price increase, announced in January, with the majority of the impact occurring in July, Hassfurther said. The company anticipates it will start to feel benefits from its second increase, announced in May, starting in August; the majority of effects will come in Q4.
“Of course, we had the $20 reduction that was announced by RISI, which impacted price as well,” Hassfurther said.
Power considerations
Operational performance was a “mixed bag” in Q2, largely because of five instances of unplanned downtime due to utility power outages, Kowlzan said. In total, that affected about 10,000 tons of production. One mill shut down for most of a day, and then sporadic power issues continued there for several days, he said. At another location, “basically you’re in forest fire season, [and] we had the utility shut down the entire regional system without notifying anybody. So it took down the mill instantaneously out in Wallula [Washington] and impacted us for a period of time.”
These power challenges underscore the importance of PCA’s in-progress projects to install gas turbines at three mills, which will reduce or eliminate the mills’ reliance on the power grid, Kowlzan said. The gas turbine at the mill in Jackson, Alabama, is likely to go live in early 2027. The company is tied up in permitting for the other two — in DeRidder, Louisiana, and the Riverville mill in Gladstone, Virginia — so those likely won’t come online until the first half of 2028, Kowlzan said. “Go figure: We want to put in gas turbines, but it’s taking us longer to get state and federal permits than it does to put in a data center. We should have called them data centers.”
