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On Wednesday, Citi analysts reported on the upcoming closure of Georgia-Pacific’s Cedar Springs mill, interpreting the event as a positive development for International Paper (NYSE:IP), WestRock (NYSE:WRK), and Packaging Corporation of America (NYSE:PKG). International Paper, currently trading at $50.33 with a market capitalization of $26.7 billion, has shown strong momentum with a 9% gain in the past week. According to InvestingPro analysis, the company maintains a robust market position with annual revenues of $19.9 billion. Georgia-Pacific, the fourth-largest containerboard producer in the United States, has planned to cease production at its Cedar Springs facility on August 1, 2025. The mill currently contributes approximately 2% of North American industry capacity with an annual output of 1.02 million metric tons per annum. The facility operates three machines, which produce 800,000 tons of unbleached kraft linerboard and 227,000 tons of corrugating medium.
This decision comes on the heels of similar actions by other industry players, such as WestRock’s closure of its Forney, Texas mill, which removed 400,000 tons from the market, and International Paper’s cessation at its Red River, Louisiana mill, cutting 800,000 tons. These moves are in response to declining demand for containerboard, which has seen a drop of 8.7% since 2022. The first quarter of 2025 alone showed a year-over-year decrease of 2.1% in box demand, according to data from RISI.
Citi’s analysis suggests that the reduction in capacity due to these mill closures could be beneficial for the remaining producers by helping to maintain the balance between supply and demand. The firm anticipates that domestic containerboard prices will remain steady at $845 per ton, despite some industry chatter about a potential modest decrease in price following Pulp & Paper Week’s (P&PW) commentary on May 2, which hinted at a possible $20 per ton price erosion.
Citi maintains that supply discipline, cost support, and stabilizing demand might prevent a decline in prices. They believe that Georgia-Pacific’s announcement reinforces the notion of supply discipline within the industry. The market awaits the official May containerboard price publication by P&PW, which is expected after the market closes on Friday.
In other recent news, International Paper has made several notable announcements impacting its operations and financial outlook. The company has decided to restructure its operations in the Rio Grande Valley, converting its Edinburg, Texas, sheet plant into a warehouse and enhancing its McAllen, Texas, facility. This restructuring will also involve transferring operations from Reynosa, Mexico, to a newly constructed site in the same city. Additionally, International Paper announced quarterly dividends, with common stockholders receiving $0.4625 per share and preferred stockholders receiving $1.00 per share, reflecting the company’s commitment to shareholder returns.
The company has also amended its pension plan to allow certain executives, including Clayton R. Ellis, to continue accruing service time post-divestiture of its global cellulose fibers business. This amendment was part of the decisions made at the annual shareholder meeting, where all proposed board directors were approved, and Deloitte & Touche LLP was ratified as the independent auditor for 2025. In the broader industry context, Georgia-Pacific’s decision to shut down its Cedar Springs mill is seen as a strategic move to align supply with demand, a trend noted by analysts at Truist as potentially beneficial for pricing dynamics in the North American containerboard market.
Bank of America analysts have observed that recent mill closures, including those by International Paper, indicate a broader industry trend of declining demand expected in 2025. These developments suggest a strategic effort by companies to manage supply in response to market conditions. International Paper’s recent acquisition of DS Smith has further strengthened its market position, particularly in North America and EMEA, as the company continues to lead in sustainable packaging solutions.
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