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As we look toward the global packaging market outlook for 2026, several key geopolitical and economic forces are set to reshape the industry. Understanding these trends is crucial for navigating the challenges and opportunities that lie ahead.
Geopolitical tensions are a significant factor defining global markets and will continue to shape the global packaging market outlook for 2026. The ongoing conflict between Russia and Ukraine continues to affect energy prices, trade flows and material availability, especially in Europe. Disruptions in the Red Sea periodically raise freight rates on trade routes between Asia and Europe. And now there is the war in Iran which will raise energy prices and disrupt trade routes, with the full degree of impact unclear given the uncertainty on how long the war will last. Additionally, the strategic rivalry between the United States and China is driving a shift toward regionalized supply chains, which is increasing the importance of local cost competitiveness.
Global GDP growth remains moderate and uneven, with advanced economies growing slowly due to high interest rates, while emerging Asia — especially India and ASEAN — remains the strongest source of consumption and industrial activity. Energy markets continue to be volatile, and Europe’s carbon pricing systems threaten to disproportionately raise production costs for both recycled and virgin fiber grades of paper, widening cost gaps between regions. In all major markets, geopolitical uncertainty is slowing investment decisions and elevating the importance of supply security.
Consumer confidence has slightly rebounded from the lows of the 2021-22 inflation shock but remains fragile, leading to greater value awareness in developed markets and more cautious spending in Asia.
E-commerce, once the driving force behind growth in containerboard, has shifted into a post-COVID normalization phase. It is currently experiencing moderate growth in mature markets at mid-single-digit rates, while emerging Asian markets are growing faster. This trend supports a steady demand for lightweight, high-performance corrugated packaging, although the growth is not explosive.
The rapid growth of discount retailers and private labels is reducing demand for fiber-based packaging, primarily in Europe. Private labels often prioritize profit margins, which frequently leads to higher plastic use in their packaging. In the boxboard market, although demand is bolstered by the food, pharmaceutical and personal care sectors, the shift toward discount retail has weakened premium categories. This is especially true for beauty, luxury and branded consumer goods, where folding boxboard (FBB) typically outperforms.
Regulatory pressure — particularly in Europe, at the state level in the US and in certain parts of Asia — continues to promote fiber-based alternatives to plastics, supporting medium-term growth in both cartonboard and some corrugated formats. However, the pace of substitution has slowed for three main reasons: weak consumer demand and cautious behavior from retailers are delaying redesigns and packaging overhauls, high interest rates have led brand owners to postpone capital-expenditure-intensive packaging shifts, and cost optimization pressures have prompted some retailers to maintain or even increase their use of low-cost plastics in discount segments.
The inventory fluctuations in 2022-23, driven by mismatches between production and actual consumption during the pandemic, continue to affect the industry. As we enter 2026, demand signals are still difficult to interpret. Manufacturing sentiment in several regions is improving faster than consumer spending, raising the risk of another inventory buildup followed by rapid destocking.
Retailers and fast-moving consumer goods (FMCG) companies are keeping lean inventories and placing shorter-cycle orders, resulting in more volatile demand for containerboard and boxboard producers. Weak consumer confidence heightens this risk. Furthermore, global consumption trends are polarized, with premium categories recovering slowly while value-oriented and discount formats grow, creating a more price-sensitive and volatile market for producers. Although demand is stabilizing, growth remains modest in mature markets.
The European containerboard market is entering 2026 under significant pressure from weak demand, excess capacity and shifting cost dynamics. Economic momentum in the eurozone deteriorated in late 2025, with manufacturing contracting and new orders sharply declining, although the services sector continued to show limited growth.
Containerboard capacity in Western Europe reached over 1.2 million tonnes of new capacity in 2025, primarily due to recycled containerboard machines from Heinzel, Mondi, Norske Skog and Turkish producers, while closures removed only about 435,000 tonnes. This resulted in operating rates dropping to around 84%, the lowest since late 2023.
Costs fell sharply in late 2025, but rising energy prices are now threatening this relief. While net exports reached nearly 5.0 million tonnes, they were insufficient to offset the weak domestic demand. The outlook for 2026 indicates a slow recovery, with containerboard demand projected to grow by only 1.7%, requiring additional closures to improve operating rates.
The cartonboard market in Europe is even weaker, with a sharp contraction driven by low consumer confidence and negative retail sentiment. Demand fell 10% year on year in the fourth quarter of 2025, driven by declines in beverage and tobacco production, modest growth in food categories and a consumer shift toward discount and private label products that use more plastic packaging.
Net exports declined in the fourth quarter due to reduced competitiveness, higher tariffs and increased imports from China, which rose 35%. Consequently, production fell in 2025, while capacity declined only slightly, leading to operating rates of around 69% in the fourth quarter, among the lowest on record.
Demand is set to gradually recover after the destocking phase, but it will likely stay significantly below early 2024 levels until late 2026. Overcapacity will exceed 1 million tonnes, prompting companies to further reduce capacity through 2027. The sector faces ongoing margin compression, cost-driven pricing pressures and a strong need for consolidation.
In North America, the US packaging paper sector enters 2026 following an exceptionally turbulent 2025 that was marked by significant supply rationalization and persistently weak demand. Containerboard producers permanently closed more than 4 million tons of capacity, marking the largest one-year reductions on record. Although box shipments and manufacturing activity remained subdued, these closures lifted operating rates from the high 80s to the mid-90s by the end of 2025, setting the stage for price increase attempts in early 2026.
Demand was fragile in 2025 despite healthy headline economic growth. If this growth feeds into goods spending and packaging demand in 2026, the rise in containerboard operating rates that has so far mostly been driven by closures will be amplified by a stronger domestic demand environment. Inflation remains a major issue in the US consumer economy, with costs also an important concern for packaging producers.
On the cartonboard side, the challenges stem from excess supply from new SBS (solid bleached board) and CRB (coated recycled board) machines amid weak demand. Beverage, food and folding carton applications underperformed in 2025, causing SBS operating rates to drop to around 82% and leading to price erosion. Although CRB operating rates briefly increased due to earlier closures, we expect them to fall again as new capacity ramps up. Closures may be necessary to restore the balance between supply and demand.
Asia is grappling with soft packaging demand, increasing capacity and volatile prices. For containerboard, China leads the market, but while consumption grew marginally in 2025, hurt by weak consumer spending — despite some surprisingly healthy support from goods exports — producers continued to add capacity (up 7%), which lowered operating rates and eroded producer margins. The rest of Asia also experienced slower demand growth due to the trade war and sluggish consumer spending. This, along with weaker exports to China, led to lower operating rates and flat production growth. Given the wide gap between regional demand and supply, there are limited prospects for Asia to simply grow its way out of oversupply. Capacity closures will be required.
In December 2025 and January 2026, prices for testliner and corrugating medium in China declined significantly after the solid rally from August to November. That rally resulted from seasonal demand improvement and, mostly, rising OCC cost pressures.
China’s sudden implementation of a 100% inspection policy on recovered paper pulp imports in early October, along with higher OCC costs and resulting uncertainty, contributed to the price increase. The rally paused in December, and declines continued in January as seasonal demand weakened and excess capacity put downward pressure again. In Southeast Asia, import prices rose later in the year, but domestic prices in some markets — such as Indonesia — climbed more sharply as domestic markets tightened due to brief export opportunities to China and stronger seasonal demand. Those opportunities have now faded, so the tight conditions have dissipated. The main uncertainty comes from China’s final regulations on recovered paper pulp imports, which could be announced in the coming months.
The Asian cartonboard market is stable but vulnerable. In late 2025, rising costs, seasonal demand and restocking efforts drove up prices for coated ivory board and duplex board in China. Unlike containerboard, cartonboard suppliers successfully raised prices in December and January, due to stronger demand and the need to recover margins. Improvements in the coated duplex market, driven by capacity shifts, contributed to these price hikes. However, overcapacity will still be an issue in 2026, especially for ivory board. While some announced projects have been delayed, two large machines commenced operations in China during the second half of 2025, and a significant expansion in Indonesia is anticipated soon. Both countries are aiming to expand in export markets, which will intensify competition with North American and European suppliers.
In recent years, Asia has become self-sufficient in containerboard and a net exporter of boxboard in 2022, with shipments steadily increasing. Reliance on North American kraftliner has decreased as Chinese buyers shift to local or lower-cost suppliers. As a result, Asia is disrupting global packaging paper markets and is no longer a potential outlet for excess supply. Looking ahead to 2026, the Asian paper packaging market will likely face oversupply challenges, as demand growth remains subdued. This will make it difficult to absorb recent supply increases, especially with new capacity coming on line. Cost-driven competition will continue, keeping profit margins low, which could trigger much-needed capacity closures, though it might take time.
Asia’s markets, and especially China, are undergoing major shifts in fiber usage. These dynamics have been ongoing since the Chinese government fully implemented its ban on recovered paper imports in 2021. The immediate impact was a shift to invest in Southeast Asia so as to continue to have access to the higher quality recovered paper available outside of China. These investments were both in product, and especially containerboard, and in recovered paper pulp to be shipped to China. More recently, many Chinese companies have been integrating their mills by adding pulp lines to maintain the quality of their products and to reduce costs. The pulp lines feed both containerboard and boxboard machines. This has helped companies become more competitive, but there is a potential future issue concerning the availability and price of wood chips.
Latin America is losing economic momentum in 2026, with uneven growth and rising uncertainty. High interest rates and slower household income increases have reduced demand for packaging-intensive goods. We now project containerboard demand will grow 1.4-1.8%, down from 2.3%. In Brazil, corrugated box shipments will rise only an estimated 0.7%, below the 1.6% GDP growth rate, while containerboard demand growth slows to 0.8%. These changes reflect the increasing influence of agribusiness and exports, affecting domestic packaging and posing ongoing challenges for manufacturers and consumers.
The regional paper packaging markets are feeling the effects of global trade trends, which are limiting exports and causing exchange rates to drop. Rates fell in 2025 and will likely decline further in 2026, reaching a two-year low. This trend is affecting industry competitiveness and reducing regional demand. However, Peru stands out for its growing agribusiness sector, which is supporting packaging demand for containerboard, particularly for niche markets such as blueberries, mangoes and avocados, with annual consumption of about 480,000 tonnes.
The demand for boxboard in the region has been challenged since the pandemic, driven by declining paperboard usage amid fluctuating consumer confidence and a shift toward digital entertainment and value-conscious spending. Sectors such as food, pharmaceuticals and personal care provide some stability, but the outlook for 2026 remains cautious, with demand expected to be flat. The popularity of GLP-1 medications is also changing how consumers buy packaged foods. While there may be some growth in proteins and fresh produce, the decline in processed foods — an important downstream user of boxboard and corrugated packaging — raises concerns. In response, end-users are shifting back to more affordable plastic packaging to maintain profit margins amid falling volumes.
Latin American boxboard markets are facing significant challenges due to the rise of affordable Asian imports, particularly Mexico, Brazil and Argentina. Mexico’s tariffs on non-partner countries, which went into effect in 2024, have inadvertently created difficulties for Brazil by narrowing profit margins and slowing shipments into Mexico, making them less competitive. Asian producers, pushed out of the Mexican market, are now targeting Argentina and Brazil, intensifying competition in markets with weak local demand. As a result, the boxboard industry across the region is experiencing tighter margins, increased volatility and a more crowded competitive landscape.
Looking ahead, the Latin American packaging sector remains exposed to both cyclical and structural risks. Regionwide shifts in trade policy, evolving consumer behavior and currency volatility have and will continue to contribute to a more uncertain operating environment.
As we enter 2026, the packaging paper industry faces geopolitical tensions, lingering inflationary effects and weak consumer confidence. The quickly developing war in Iran looks likely to raise energy prices and possibly reignite inflation depending on the duration of the war. Demand is uneven, and cost pressures are straining competitiveness. With oversupply in key markets and cautious spending patterns, any recovery is likely to be slow and bumpy.
In a market defined by uncertainty, oversupply and shifting cost dynamics, having the right insight isn’t just useful — it’s essential. Fastmarkets’ independent forecasts, pricing data and deep-dive analysis help industry leaders make confident, forward‑looking decisions in a rapidly changing global packaging landscape.
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Learn how to monitor packaging prices using cost and price indices and understand the underlying cost drivers, from material cost to labor, energy and more. Examples include cartonboard, liquid container and paper bag.