Demand for corrugated boxes must go back to 3% in 2015, ABPO

Association expects 4 percent drop in sales in the second half of the year compared with the same period in 2014, pressed by the industry downturn and deterioration in the confidence of entrepreneurs
Sales of carton packaging should retreat between 2.5% and 3% in 2015, estimates the Brazilian Association of corrugated board (ABPO). According to the entity, the retraction of the internal market must continue weighing on the industry in the second half.
After falling more than 2.5% between January and June compared with the same period last year, the sector must register a fall of 4% in six months, believes the Vice President of the ABPO, Sergio Ribas. Although historically present better results in the second half, the industry downturn in the country and the deterioration of expectations the economy will weigh on the segment, which explains the retraction even more expressive, says the Executive.
"In addition, the first half of last year had already been impacted by the effect of the World Cup, what did the fall of the first months of this year look smaller in comparison," says Raj.
"The second half of 2014 has had good results, with expeditions over 290 thousand tons per month, which deepens the fall this year." For 2015, he expects monthly sales of about 280 thousand tons.
The segment of packaging for food and drinks, which represents more than 50% of production in the sector, was presented the best performance, due to the natural resistance of the food products to the fluctuations of the economic environment, says the Vice-President of the Association. Sales of cardboard for the automotive sector and to pack white appliances (fridge, stove and washer), on the other hand, recorded the biggest falls.
Within the segmentation of the companies in the sector, the more vertical groups, that have paper production units, manufacturing of corrugating and packaging, are those who can cope better with the challenges of the current scenario, says Raj. Already the so-called box companies, who buy the already wavy paper to create the boxes, suffer more because they can't mitigate the growing expenses with electric power, the payroll and the inputs.
Ribas regrets not seeing any sign of improvement in shipments of corrugated boxes, that end up serving also as a kind of bellwether for the health of the domestic industry. "For now, we see no projection of improvement compared to last year. Anything that demonstrates "recovery, he says. "On the contrary, we are in a worse sales estimate in the second half."
Between April and June, the Brazilian industrial production retreated 6.7 percent a year earlier, according to the Brazilian Institute of geography and statistics (IBGE).
For now, according to Ribas, the appreciation of the dollar, is the only positive engine that has helped the packaging industry. The strength of the American currency against real favors exports of customers that use cardboard boxes to transport their products, while inhibits imports of items packed in other countries. "But there are so many factors that weigh on the domestic market that this incentive ends up losing", says the Executive.
Export
To bypass the slowdown of the internal market, Klabin began to export its production of Kraftliner, main type of paper used in the manufacture of corrugated board. "In the context of a slowdown in the national markets and better conditions in the international market, the increase in sales volume of the Klabin was basically directed to markets outside of Brazil", confirmed the company in its presentation of results of the second quarter.
Between April and June, the company's exports grew 12% in comparison with the same period in 2014, while the volume of domestic sales remained stable. Shipments, representing 32% of the total sales, up from 29% in the second quarter of last year.
Cartoner
For conversion of inputs in corrugated board, however, there was no truce. Business unit sales fell 3 percent in the first half compared to the same period in 2014, due to the worsening of the domestic market. "In this context, Klabin has followed the market fall, mitigated by the option to send larger volumes of papers to foreign markets," said the Director of relations with investors of the company, Antonio Sergio Alfano.
In Suzano, the movement was similar. The company's paper sales fell 6.6% in the first half of the year compared with the same period in 2014.
Brazilian industry data Trees (Ibá) indicate that the domestic sales of Cartonboard (cardboard) recorded a fall of 5.3% in the second quarter compared with the same months last year.