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The Peruvian corrugated paper market continued to show weaker activity in the second quarter of 2023, while the country’s macroeconomic scenario deteriorated amid lower agricultural exports.
According to a local source, 45% of corrugated box consumption takes place in the first half of the year. In 2023, demand has been 5-10% lower when compared with 2022.
“We expect a second half of recovery. Optimistically, if we reach the same volumes of the second half of 2022, total Peruvian demand can end 2023 between 4% and 8% below what it was in 2022,” a Peruvian market source said.
Kraftliner imports have been dramatically dropping so far, with only 3,158 tonnes registered in the first fourth months of the year, according to data from Peruvian Customs. This represents a 92.3% year-on-year drop, with imports from the US alone slumping by 91.1% to 926 tonnes.
Brazilian exports to Peru, which accounted for 10,020 tonnes in the first four-months of 2022, were 31 tonnes this year, a drop of 99.69%.
“The agricultural segment, which contributes to about 50% of the local corrugated box market, was also hit by lower prices at destinations and therefore lower profitability. Agriculture exporters are requesting lower box prices and demanding longer payment times,” the source said.
Integrated paper producers have higher paper inventories, so even with a more optimistic second half, there will be still higher paper stocks at the end of 2023.
Agriculture exports from Peru take place all over the year, but the second half of the year has major campaigns of blueberries, grapes, mangoes and avocados that can help to boost a little bit of consumption looking ahead, the source added.
In the first quarter of 2023, corporate investment bank Itaú BBA reported that Peruvian economic activity fell 0.4% year on year, under the impact of social protests and harsh weather conditions, which are weighing on agriculture production.
“Private consumption slowed to 0.7% year on year in [the first quarter of 2023], limited by mobility restrictions (road blockades) and closure of markets. Likewise, private investment fell by 12% and exports dropped 2.1%, also affected by social unrest through lower mining production, which was mitigated by lower imports,” Itaú BBA said in its June outlook for the country.
According to Itaú BBA’s forecast, the Peruvian GDP is set to grow 1.4% this year, with risks to this forecast that include the El Niño climatic event, which may curb agriculture activities even further.
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