The complex and changeable macroeconomic environment has seriously affected the corrugated packaging industry. In China, most packaging enterprises were faced with a decline in orders in the first half of the year, and even listed packaging enterprises also faced greater operating pressure. After entering the fourth quarter, the phenomenon of “nine gold and ten silver” did not come, and the market prosperity did not rise sharply as in previous years.

The corrugated packaging industry in the United States also faces similar difficulties, not only in China. According to the “Zhitong Financial APP”, orders in the U.S. cardboard industry began to decline in July, and customers and manufacturers are dealing with excess inventory. Analysts pointed out that the price of the cardboard industry will fall in the fourth quarter, and “the situation may deteriorate to 2023″.

According to the news, Philip Ng, an analyst at Jefferies, a famous investment bank on Wall Street, recently downgraded the ratings of international paper and American packaging companies from “holding” to “reducing”, and lowered their target prices to $31 and $112 respectively. Meanwhile, the target price of WestRock was lowered to $42, but the “hold” rating of the stock was maintained.

The international paper industry is mainly engaged in the production and manufacturing of industrial packaging, global cellulose fiber and printing paper. The main businesses of American packaging companies are packaging, paper, etc. WestRock’s business scope includes corrugated paper packaging, consumer packaging, land and development. These three enterprises are all giants in the American packaging industry, and their scale and volume are in the leading position in the international industry.

The analyst said that after investigating the channels, he found that the cardboard industry had a large inventory surplus, orders were significantly reduced, and large-scale production stoppage was also in progress (even for smaller enterprises). Analysts said: “Retailers are generally destocking recently due to rising inflation and consumers’ reduced spending on purchases, which is not entirely surprising.”

The analyst explained: “In the past two years, in order to ensure supply, cardboard orders have tripled or tripled. With the sudden slowdown in demand and the inventory at the end of the second quarter at a cyclical high, cardboard orders began to decline in July and continued to decline until September, when customers and manufacturers were dealing with excess inventory.” Analysts pointed out that the price of the cardboard industry will fall in the fourth quarter, and “the situation may deteriorate to 2023″.

Analysts further pointed out: “The demand for paperboard is one of the representatives of the economy. Considering the exposure of international paper industry, American packaging companies and WestRock to terminal markets with stronger periodicity, such as durable goods, their earnings and stock prices tend to be significantly adjusted during the economic downturn.”