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Forecasting is not an absolute exact science, but it provides a general expectation of future growth scenarios based on assumptions. Accessing two, five and 15-year forecasts by region and grade enables parties to plan around market changes.
At Fastmarkets, our macroeconomic forecasts serve as a foundation for various forestry product forecasts, such as pulp, packaging, lumber and boxboard, using a mutually agreed general basis block.
Because our macro forecasting model is cyclical, the data and procedures identify recurring patterns and helps to judge the overall health of the market and ascertain potential risks.
By doing this, we provide comprehensive coverage across various commodities to help clients understand global macro environment trends.
To help buyers, sellers and traders navigate price volatility, and understand market movements in the forestry industry, we need to look at key global influences on quality, prices, supply and demand. In the next six months or so, there are several issues to consider.
The uncertainty sparked by the new Trump administration in the US, and how it will impact consumer and business sentiment, is an unavoidable factor and is one that we expect will continue for the duration of his tenure in the White House.
Our forecasting enabled us to factor the weakened Euro and other currencies into the macro forecast before the US announced its intention to place tariffs on goods. This provided clients with a solid basis for their business planning and risk management strategies.
Meanwhile, slow growth in China is impacting demand for goods from Europe to that market, which consequently affects the economy in the eurozone. However, while economic pressure from the US is weakening the euro, lower European interest rates (there were four ECB interest rate cuts in 2024) are beginning to boost consumption. And the prospect of greater consumption across the eurozone will in turn help Chinese or American goods being sold to Europe.
Elsewhere, the Brazilian Real is weak against the US dollar, but because Brazilian pulp production costs are paid in the local currency while the product is traded in US dollars, this will have a beneficial impact on the Brazilian economy.
In the short-term, we expect energy consumption and production to have a key impact. Because forestry industries consume energy for paper and board manufacturing, they tend to benefit from stable energy prices. We expect the demand for oil and gas to decrease, which should make energy prices less volatile, while the shift to renewable energy sources could be beneficial for business stability.
The renewable and recyclable nature of forest products industry products make it well-suited to cope with climate and sustainability challenges, and we see companies shifting towards renewable energy sources as a long-term investment for business stability and predictability.
Our forecasts provide a comprehensive view of the global macro environment to help clients understand global trends. By focusing on longer-term ups and downs, booms and busts and the use of a single macro for multiple products, our insights allow clients to see how different products behave against each other under the same macro assumptions.
As a trusted third-party index, independent valuation is key to how Fastmarkets assesses the market. This unbiased, independent research helps buyers and sellers minimize risk, understand market forces that drive price movements and supply/demand shifts in the paper packaging market and predict future trends based on expert insights and analysis.
Want to learn more? Utilizing macroeconomic forecasting is a key theme in our upcoming whitepaper, Navigating price volatility in the forest products market. Sign up now to receive the report.
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.