Box Industry Demands Immediate Withdrawal of Excessive Corrugated Cardboard Price Hikes

An employee at a corrugated cardboard factory is bundling corrugated cardboard boxes with a banding machine. Photo by Asia Economy DB

[Asia Economy Reporter Moon Hyewon] The Korea Box Industry Cooperative Association stated on the 25th that “the excessive increase in corrugated cardboard prices must be immediately withdrawn.”

In a press release issued that day, the association condemned, “In a situation where the entire box industry is struggling due to the COVID-19 pandemic, the paper manufacturers, who are at the top of the vertically integrated industry, raising prices to cover losses is an act that disregards the government’s emergency economic policy and the spirit of coexistence and cooperation, and it leads to the destruction of lower-tier related industries.”

They urged ▲ the immediate cessation of unilateral price increase notifications by large corporations and the initiation of communication ▲ the realization of box prices reflecting the increase in paper prices (getting the right price for boxes) ▲ the resolution of paper supply imbalances and the cessation of discriminatory raw material supply.

According to the association, the small-scale box industry, which mainly produces boxes for packaging industrial and small business products, has not benefited at all from the increased parcel box market due to COVID-19. Therefore, they consider the sudden 25% increase in paper prices, notified during a period of concern over supply imbalance caused by the fire at Daeyang Paper, to be excessive.

Furthermore, the association expects that if the price of corrugated raw materials rises sharply due to the increase in paper prices, the box manufacturing industry, which is at the lowest tier of the industry, will ultimately bear a price increase of about 50%. They argue that this could lead to a chain bankruptcy of about 2,000 small-scale box manufacturers nationwide, resulting in the destruction of the entire industry.

Currently, the price of imported waste paper has been steadily declining since June this year and is now $178 per ton, about 10% lower than the previous month. Although waste paper imports have somewhat decreased after the import declaration, 32,951 tons were imported in August, about 5% more than the previous month.

Domestic waste paper prices have slightly increased in the first half of this year but are traded at 76 won per kilogram, below the five-year average of 91 won. After continuously falling to 60 won per kilogram earlier this year, supply has been maintained through stable slight increases depending on domestic supply and demand conditions.

The corrugated box market consists of three stages: corrugated paper manufacturing, corrugated raw materials, and corrugated boxes. Large corrugated companies occupy about 90% of the paper market, 70% of the raw material market, and 50% of the box market through vertical integration, manufacturing paper, raw materials, and boxes.

The association stated, “Large corrugated companies increase paper prices and produce raw materials through their affiliates to manufacture boxes, and when delivering to the same clients as small and medium-sized enterprises, they do not raise the final box price, which naturally results in the theft of clients from small box companies.” They added, “As long as this unreasonable vertical integration problem repeatedly occurs, the small box industry cannot escape the burden of bearing all the pain alone. Therefore, price increases in paper under the current unfair structure, where the monopoly problem of vertical integration is not resolved, must be stopped through institutional improvements.”

This content was produced with the assistance of AI translation services.