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US sources expect 2.5 million tons of permanent capacity closures will impact market linerboard supply, based on reports in July. However, they are uncertain how much of an impact it may have on supply and then on prices as corrugated box demand in the US remains steady yet sluggish, market contacts reported two weeks ago to Fastmarkets.
The key factor for the market remains focused on the corrugated box demand, where actual shipments declined by 2.1% in first quarter on a year-over-year basis and then dropped 2.6% year-over-year in the second quarter, according to Fibre Box Association statistics reported on July 25. The final capacity closures are expected in the next five weeks. This said though, some market contacts foresee additional permanent capacity closures in the US by yearend.
The largest KLB mills being closed are International Paper’s (IP) Campti, Louisiana operation and Georgia-Pacific’s Cedar Springs, Georgia mill. Those mills combined have almost almost 1.9 million tons of capacity, or nearly 5% of containerboard capacity in the US.
“In June we saw all US mills hungry for orders,” a linerboard exporter of US KLB said. “I have no idea of what to expect: We have to see the [impact of the] never-ending tariff story, and also there is a new price indication system to be advised next week in Mexico.”
The permanent closure of the 2.5 million tons is to finish in early September, just when US boxmakers typically see pickup in box orders for the holidays. As of mid-July, Fastmarkets learned that boxmakers remained uncertain about holiday order pace.
In a startling show of the power of tariffs, the US exported just 4,000 tonnes of KLB to China in May. Prior to this in 2025, China purchased an average of 45,000 tonnes per month of US KLB.
The US/China trade war led to increased tariffs in April and then a lowering of the import tariffs in both countries. One major US KLB exporter pulled out of the China market, sources told Fastmarkets in May, and a second large US producer was said to have pulled back as well, a source in China told Fastmarkets on July 10.
Through May in 2025, US KLB shipments to China were down by 57.7% at 113,018 tonnes, a 154,381-tonne decline from the US shipment total in the same period in 2024.
Despite the anticipation for US export unbleached kraft linerboard prices to increase, the price has remained unchanged this month.
Buyers and sellers are reporting ample supply and some note high inventory in key export destinations.
“A lot of them – big customers – have high inventories,” a US seller said of buyers on Tuesday July 15.
The Mexican peso appreciated against the US dollar, raising the cost of Mexican goods and reducing the value of US export volumes into Mexico. The exchange rate moved to $18.76 per dollar on Thursday July 17, down from $20.84 on April 8.
This came amid continued talk that major US integrated producers may be redirecting tonnage away from export markets. On Tuesday, one seller said two major integrated companies were expected to pull back volumes to the US market.
In Europe, a supplier said on Monday July 14 that US KLB prices “remain unchanged. Due to the exchange rate, the US suppliers are getting more USD for the Euro paid.”
With 2.5 million tons of US containerboard capacity being permanently retired from February through early September this year, US suppliers believe the large capacity shutdown will ultimately reduce US supply into the export market.
“Certainly, with all the consolidation, we anticipate that KLB pricing for export will firm up, and possibly increase at some point, but that hasn’t happened as of yet,” a US exporter said. “Possibly in September/October.”
However, at the same time, offshore sources told of more than ample supply available for recycled linerboard.
“Our buyers in Mexico still have plenty of KLB options. If any vendor were to raise prices, they would simply move the order to avoid any increase. It’s not a climate where they can raise box prices — and still keep the business. We’re also seeing a glut of recycled containerboard from Europe and the Middle East being dumped in Mexico/Central-South America.”
The source continued: “If more tariffs take hold in the US, we expect even more aggressive [linerboard price] offers to be presented in these other regions.”
“Many of us have… increased (corrugated box) prices to our customers, but this has been a tough thing to do…. I’m afraid a price war will start as many companies are down in volume and might want to take advantage of everyone increasing prices,” a boxmaker in Mexico said on Wednesday July 16.
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