Forest products markets face mounting pressure

The Covid-19 pandemic has triggered behavior shifts and supply disruptions that are changing the economic landscape. It has also uncovered and accelerated powerful market dynamics that were already placing pressure on forest products markets, including paper packaging, tissue and lumber.

Fastmarkets RISI has examined six macro forces that will continue to alter the landscape. Some of these may be familiar, but others have perhaps been hidden, brewing beneath a seemingly stable economy. Decision-makers must keep up with the unpredictable effects of these forces, as well as the price signals and other indicators that will guide the market going forward.

Whether directly or indirectly, these macro forces span across the forest products industry. Here are just a few of the dynamics we are observing: 

• Single-use plastics gained popularity during the pandemic for their affordability and hygienic properties. However, investments in more eco-friendly paper-based packaging remain strong. 
• At-home work and education have increased demand for e-commerce and corrugated packaging, and simultaneously accelerated the decline of printing and writing papers. The winners and losers are starting to shake out. 
• Despite US housing starts declining by 30% in April, DIY projects have driven up demand for lumber. How long this continues may directly correlate to the long-term or permanent continuation of remote work.

Your ability to successfully anticipate change and adapt will depend greatly on your understanding of how these forces will affect your business. Those who rely on antiquated methods of prediction and forecasting will be ill-prepared for the next normal. In fact, many of these markets may see durable change in the near future. Below, we offer a simple way to evaluate market imbalances for when they may be approaching a structural, durable change.

Ask yourself how you are staying current, how you can distinguish between temporary and long-term disruptions, and what macro forces in other markets may directly affect your business. Our industry leading experts are looking up and out to follow these dynamics to ensure you’re given the best competitive advantage possible.

Change is already brewing beneath the surface – be ready. Read our full report here.