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Folding Boxboard: When Will North America Get On Board?

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By Clay Enos, Director of Business Intelligence Consulting, Fisher International

More than 75 percent of bleached virgin cartonboard manufactured in Europe and Asia is folding boxboard (FBB). Yet, in North America, FBB production is nearly non-existent. Used in limited amounts, the North American FBB demand is fulfilled mostly by imports.

With the rest of the world showing a clear preference for FBB over SBS, why has North America not adopted it as the “go-to” for cartonboard? More importantly, will this change?

The global cartonboard market is comprised of the following grades:

  • Coated Recycled Board (CRB)
  • Uncoated Recycled Board (URB)
  • Folding Boxboard (FBB)
  • Solid Bleached Sulfate (SBS)
  • Solid Unbleached Kraft (SUK)

The two bleached virgin products, FBB and SBS, have broad and overlapping end uses. Globally, these products are used for liquid packaging (e.g., aseptic, gable top); foodservice (hot/cold cups, plates, carryout); and folding applications (beauty/toiletries, food packaging, cigarettes, consumer electronics).

Where SBS is being used in North America, the rest of the globe uses FBB—and for good reason. FBB has an engineered, multi-ply structure that allows for many desirable characteristics versus SBS. As the global standard, FBB offers brand owners the additional benefit of substrate consistency across regions. As stated earlier, while FBB use in North America has been limited, it is showing growth.

If FBB offers a number of advantages over SBS, why do North American mills appear reluctant to produce it? A closer look reveals some possible answers. Compared to its peers, North America has older cartonboard assets. What’s more, very few of these cartonboard machines have multi-ply capability, a requirement in FBB production.

Surely, existing paper machines can be converted, but the short-term capital implications often overshadow the potential for long-term cost benefits. While a valid concern, this argument ignores two important points in favor of FBB production in North America. First, wood fiber is an essential component in FBB manufacture and North America has a lower average wood fiber price when compared to Asia Pacific and Europe, a clear advantage in pulp manufacturing costs. Second, electricity cost is critical to the production of energy-intensive mechanical pulp, and North American electricity costs are also highly competitive.

Benchmark data residing in the FisherSolve Next™ platform is even more revealing, allowing us to consider manufacturing costs of a European FBB machine as if it had been “transplanted” to the midwestern United States, and to compare this machine within the cost curve of North American SBS incumbents. Even with conservative modeling assumptions for inputs including capacity, unit pricing (labor, raw materials, and energy), and yield advantages, an FBB machine could hold a commanding cost position in North America, easily justifying the capital cost of its installation.

Given the rest of the world’s preference for FBB, and the demonstrated value of conversion, are there true “pain points” preventing North American migration and adoption? Or are they just perceived objections? And if so, what will it take to for North American manufacturers to get on board?

The answers to the questions above—plus illustrative figures prepared using FisherSolve data—are included in the full version of this article, forthcoming in the Nov/Dec issue of Paper360° magazine. Read the latest issue Here.

 

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