Materials

Report by ERA Research

The outlook for lumber / panel producers (Canfor, West Fraser, Boise Cascade, Louisiana-Pacific) is difficult, with no obvious upside catalyst before a recovery in US housing (unlikely before late 2023). ERA expects pulp prices to move lower through 1H23. Anticipated price declines are now almost fully priced into pulp names (Mercer, International Paper). In packaging, more pain lies in store for containerboard (Westrock) and a raft downtime will be needed to combat weaker demand and offset new capacity. Boxboard will outperform (Graphic Packaging, Clearwater Paper), with both demand and prices expected to remain robust.

Report by ERA Research

ERA Forest Products Research released their latest report on ESG commitments, progress and gaps for pulp, paper, packaging and tissue companies. Within the sphere of pulp producers, Mercer and Sappi are cited as examples of companies with strong disclosure and targets. In European paper, pulp and packaging, ambitious targets appear common but data and disclosures are healthy, with firms including UPM and Billerud mentioned. In the packaging, paper and tissue industry, WestRock appears to lead the way, with Graphic Packaging also referenced as having good targets that could spur near-term action.

Report by Beacon Policy Advisors

Democratic-controlled states have rapidly expanded laws taking aim at reducing consumer dependence on plastic. The surge in recycling laws, particularly extended producer responsibility (EPR) will raise costs for packaging producers, but manufacturers of more easily recyclable materials will benefit relatively. Aluminium is particularly well-positioned due to its properties, and manufacturers such as Crown Holdings, Ball Corp and Ardagh Metal Packaging will benefit from the Dem’s crackdown. Expect other companies leading the change from plastic to paper to also benefit, such as Graphic Packaging.