Emerging 2025 trends in the North American pulp and paper market

Predictions for 2025

For 2025, AFRY does not anticipate any major changes in the macroeconomic environment. US GDP growth should remain robust, at close to 2%. As inflation is still in the 3% range, the Fed signalled that interest rates should only ease down marginally in the next twelve months. The outlook for US consumer spending is positive. AFRY retained three essential trends that could impact the pulp and paper markets in 2025:

1. New tariffs reshaping the trade of forest-based products
2. Some brand owners scaling back their sustainable packaging goals
3. Continuation of the consolidation cycle in packaging

New tariffs reshaping the trade of forest-based products

AFRY speculates that the impact of the Trump administration on climate and energy policies will be more nuanced than promised during the presidential campaign. “Drill, baby, drill” is easier said than done, and Republican-led districts benefitted the most from the IRA (Inflation Reduction Act)¹ and have built more renewable energy capacity than Democratic districts since 2020.

Trade, especially with Canada and Mexico, is where the new administration could be the most disruptive. The new wave of tariffs and potential retaliatory measures from our trade partners are likely to alter the global trade of forest-based products and other commodities. Tariffs, as a means to reduce trade deficits and renegotiate new deals, should be considered a credible threat in the next four years.

Sustainable packaging goals

It is commonly accepted that fibre-based packaging benefits from the plastic substitution efforts promoted by global brand owners as part of their sustainability targets. 2025 marks the first major milestone in the sustainable packaging rollout strategy of many companies.

Last year, household names such as Unilever, Colgate-Palmolive and Coca-Cola announced that they would scale back their long-standing packaging sustainability goals. In this context, it is critical for packaging suppliers to ensure that they provide efficient and cost-competitive alternatives to single-use plastics.

Continuation of the consolidation cycle in packaging

2024 saw sustained M&A activity in the pulp and paper industry. The two mega-mergers of International Paper with DS Smith and Smurfit Kappa with WestRock were followed by other transactions that saw Private Equity firms increase their positions, and newcomers such as Suzano set foot in the US packaging market.

Further M&A moves lie ahead in 2025, with International Paper reportedly considering strategic options for its pulp business and Smurfit WestRock reviewing its legacy bleached board assets. The US packaging market still offers opportunities for consolidation, especially in the converting space, that might appeal to Private Equity and foreign investors.

The North American pulp and paper market has always demonstrated remarkable resilience amid evolving challenges. The current environment presents challenges and opportunities amidst an increased sense of uncertainty. By addressing potential changes in global supply chains, shifting consumer demands, and prioritising sustainability, the industry is well-positioned to adapt and grow.