Global economic malaise and the terrible state of the newspaper industry has put a huge bite on the paper and cardboard industries in 2008 and 2009, driving them to their worst performance since World War II.
That's the gist of a report on the recycling industry released Tuesday by investment firm Canaccord Adams. What's bad for the overall paper industry is also bad for the paper recycling industry, the report notes.
The past two years have seen demand for paper and cardboard, both recycled and not, shrink globally, the first time that's happened in decades, the report found. And 2009's projected 3 percent decline, on top of 2008's one-percent drop, could mark the worst downturn for the paper and cardboard industries in the past 50 years, the report stated.
Beyond the overall worldwide economic downturn, the dramatic decline of the newspaper and magazine industries in North American and Europe has taken a toll, the report noted.
The "undeniable shift" from printed media to online media in those markets will continue to lead to pulp and paper mills closing down in the United States and Canada, the report's authors predicted.
Still, Asia's growth could help the paper industry recover next year – and that's good for recycled paper as well as the kind that comes from freshly-cut trees.
Overall paper and cardboard markets should see a three-percent annual growth from 2010 to 2013, the report said, citing market research firm RISI. About three-quarters of that will come from growth in packaging, and tissue paper will also see growth – after all, the report notes, you can't make digital toilet paper.
With that rebound should come a recovery in the recycled, or "recovered" paper market as well, the report found. About 391 million tons of non-recycled paper and cardboard will be sold in 2009, but another 215 million tons of recycled paper products will also be sold that year, RISI projects.
Much of that growth will come from China, which has been supporting the otherwise dismal recycled paper market this year by buying "significant quantities" from North America, Europe and Japan, the report found.
China could overtake the United States as the world's biggest paper consumer in the coming years. While China's average consumption of 30 kilograms of paper per person is dwarfed by averages of about 200 kilograms of paper per person in the United States, China has a lot more people, and they're growing their paper use much faster as living standards improve, the report noted.
Of course, such growth in demand is bound to put pressure on paper products companies to continue to expand their use of recycled paper and sustainably harvested trees. Kimberly-Clark was the latest such company to expand its green paper goals last month (see Green Light post).
At the same time, recycled packaging is becoming far more prevalent at companies ranging from computer makers like Dell to retail giants like Walmart (see Green Light posts here and here).
Learn how to differentiate your company through greener product lines at Greening the Supply Chain on September 17 in Boston.